Crude oil production falls by largest amount in more than 40 years
by August 4, 2020 10:11 am 642 views
U.S. production of crude oil declined in May by the largest amount since at least January 1980, according to the U.S. Energy Information Administration (EIA).
The EIA released Friday (July 31) its Monthly Crude Oil and Natural Gas Production Report showing the production fell by 1.99 million barrels per day in May. The decline surpassed the previous record drop in September 2008 when Hurricanes Gustav and Ike caused production to fall by 1.03 million barrels per day. May was the sixth consecutive month in which the production declined and the third month since a national emergency was declared in March because of COVID-19.
Crude oil production fell by 16.6% in May as efforts to mitigate the spread of COVID contributed to a drop in demand. The mitigation efforts have resulted in reduced economic activity and caused changes in energy supply and demand patterns. Crude oil producers decreased production and drilling activity, and this has led to a decrease in output for the major U.S. oil-producing regions.
The benchmark West Texas Intermediate (WTI) crude oil average spot price fell from $58 per barrel in January to $17 a barrel in April. But it rose to $29 per barrel in May as production declined and demand rose.
Between April and May, Texas had the largest decrease in crude oil production among states and regions that produce oil. Production in Texas fell 14.8% or by 764,000 barrels per day. More crude oil is produced in Texas than in any other state or region in the United States. The state accounted for 41% of U.S. production in 2019. From April to May, production in North Dakota declined by 29.1% or by 353,000 barrels per day. The state had the second-largest decline in production. Along with Texas and North Dakota, New Mexico, Oklahoma and Wyoming had record monthly crude oil production decreases in May.
Crude oil production was projected to rise in July as demand and prices increase. The EIA expects U.S. crude oil production to be an average of 11.6 million barrels per day in 2020. Before the pandemic and the economic downturn, crude oil production was an average of 12.8 million barrels per day in the first two months of 2020.