TThe snowstorm that hit Texas in mid-February caused a 1.1 million barrels per day (b / d) drop in U.S. crude oil production between the second and third week of this month. In the week ending February 19, crude oil production in the United States averaged 9.7 million bpd, its lowest level since late August 2020, when Hurricane Laura struck. the production.
Texas is by far the largest crude oil producing state in the United States, accounting for 43.0% of total United States crude oil production in 2020. North Dakota is far behind, accounting for 10.4% of total United States production.
Adding to the recent drop in production caused by the snowstorm, the pandemic and a number of developments in the oil market in 2020 caused the lowest start of the year in crude oil production in the United States. since 2018, interrupting many years of boom-driven growth in the shale oil industry in the United States.
In the first seven weeks of 2021, crude oil production in the United States averaged 10.8 million bpd, down 17.2% (2.2 million bpd) than in the past. first seven weeks of 2020. The decline in crude oil production in the United States and, consequently, the decline in exports, are bad for the crude oil transportation industry as these generate much more demand for tankers. higher in tonne-miles than exports from the Middle East, Gulf or Russia when exported to the Far East.
The production of crude oil in the United States has already been squeezed by the low price of oil, as the United States faces a higher cost of production than other major world producers of crude oil. The recent rise in the price of oil pushed Brent to exceed $ 65 a barrel and thus reached its highest level since January 2020, put most of the US crude oil producers above the breakeven point. However, with another OPEC + meeting scheduled for March 4 with production levels from Q2 on the agenda, this alliance’s production is expected to increase, adding more oil to the market and increasing pressure. on the decline in the price of oil.
“The OPEC + alliance will seek a fair balance between increasing production and exports to avoid losing market share, especially in the United States, while not wanting the price of oil to fall too sharply” , says Peter Sand, chief shipping analyst at BIMCO.
“What happens at this meeting, and how it affects the price of oil, will impact the demand for US crude oil. However, even if the price of oil were to continue to rise, declining investment and platform closures in the United States mean that production throughout 2020 cannot be reactivated overnight, ”says Peter Sand, chief shipping analyst at BIMCO.
Source: BIMCO, Peter Sand, BIMCO Chief Shipping Analyst