The Energy Information Administration (EIA) announced on Monday that U.S. oil production continues to outpace earlier projections, with expectations of a decline in natural gas output in the coming weeks.
According to the April Drilling Productivity Report released by the agency, oil output across seven key oil and gas regions in the contiguous United States is anticipated to average 9.847 million barrels per day (b/d) this month, rising slightly to 9.863 million b/d in May. Notably, the April forecast reflects an increase of approximately 78,000 b/d compared to the March estimate provided by the EIA.
The upward revision in production forecasts can be attributed primarily to heightened expectations for output in the Bakken and Eagle Ford Basins. Specifically, the EIA raised its April forecast for Bakken output by 1.3% to 1.245 million b/d and increased the expectation for Eagle Ford by just over 1% to 1.147 million b/d. The recovery of Bakken production from a mid-January cold spell, which briefly halved output, has been a significant factor contributing to the increased projections.
However, the latest report also indicates a downward adjustment in the EIA’s estimate for U.S. natural gas production, reducing it by 0.4% to 100.202 billion cubic feet per day (Bcf/d). Furthermore, the agency predicts a continued decline in natural gas output in May, with a projected drop of 0.25% to 99.944 Bcf/d.
The rise in oil prices by approximately 20% since the beginning of the year, with West Texas Intermediate crude currently hovering around $85 per barrel, contrasts with the decline in natural gas demand during a warmer U.S. winter. This reduced demand, coupled with increased inventories, has exerted pressure on natural gas prices as the country approaches the warmer summer months.
Additionally, the April report reveals a notable increase in the number of drilled but uncompleted (DUC) wells across the seven key regions.
According to the EIA, the count of DUC wells reached 4,513 in February, marking an increase of 30 from the previous month’s report. This figure rose by an additional nine in March, reaching 4,522. The March total represents the highest count since October.
The uptick in the number of DUC wells is viewed as supportive of potential future production growth, as they offer drillers a rapid means to ramp up output in response to increasing prices.
It is important to note that the content was provided by Oil Price Information Service (OPIS), operated by Dow Jones & Co. OPIS operates independently from Dow Jones Newswires and The Wall Street Journal.