US crude production fell 669,000 barrels a day in April because of oversupply and a shortage of demand during coronavirus.
In its monthly report on Tuesday, the US government declared that crude oil production reached 12.06 million barrels a day.
The drop in US oil production is the result of the fall in the output by 234,000 barrels per day in Texas, the largest US oil-producing state. On the other hand, North Dakota’s production declined by 195,000 barrels per day. According to the report, US oil production decreased by 16,000 barrels per day in the federal waters of the Gulf of Mexico.
According to the US Energy Information Administration, oil production in the country dropped in April amid oversupply and a shortage of demand due to the Coronavirus epidemic.
Demand for gasoline fell 37.4 percent in April from a year earlier to 3.503 million barrels per day. Demand for diesel and other condensate fuels fell 11.9 percent year-on-year to 3.505 million barrels a day.
Natural gas production in the lower 48 states dropped to 102,992 million cubic feet per day in April. The United States produced 105,400 million cubic feet of natural gas a day in March. Gas production in Texas, the largest state in the United States, fell 4 percent to 28,631 million cubic feet a day.
There is a possibility of facilitating the reduction of OPEC Plus
OPEC members and their allies said there was a possibility that OPEC and Russia would lessen historic production cuts from August onward. Global demand for commodities has improved, and prices have increased.
Still, there has been no talk about it among the group members. Hence, the amount of production cuts is likely to reach 7,700,000 barrels by December this year.
Some analysts think that there was no likelihood of an extension of current production cuts unless demand dropped further.
The next meeting of the Joint Committee for Supervision of OPEC and Non-OPEC Agreements (JMMC) schedules monthly meetings. This time, it will be held on July 15 to propose a reduction in output.
Saudi Arabia and Russia must act in a balanced way to increase oil prices to meet their budget needs. On the other hand, they must prevent costs from rising too high. It could support the resumption of shale US crude oil production.
At the beginning of April, OPEC and its allies agreed on a global oil production cut of 97 million barrels for two months, and 7.7 million barrels for six months. However, the group members have decided to keep the initial reduction of 9.7 million barrels for another month, until the end of July. Mexico is not subject to the one-month extension. So, the decrease in July will amount to 9.6 million barrels per day.
Prolonging the OPEC Plus deal has helped crude oil prices double in the past two months. Prince Abdulaziz bin Salman, the Saudi energy minister, stated that oil demand is returning since economies worldwide are emerging from lockdowns. However, challenges remain ahead.
- Trading Instrument