America has risen to the top the list of oil-producing countries for the first time in more than four decades, analysts believe.
The US overtook Saudi Arabia for monthly crude oil production back in February and likely surpassed Russia some time in June or August, new data shows.
It comes after the development of fracking led to a boom in shale oil production while massively reducing drilling costs.
Although following the June 22 agreement between OPEC and Russia to up production to rein in prices Russia increased its output by more than 200,000 bpd, the average since the start of the year is higher for the United States, where drillers have evidently taken full advantage of higher prices and relatively low costs.
In the week ending November, the U.S. crude production hit a whopping 11.6 million bpd, according to Energy Information Administration (EIA) data released on Wednesday.
That’s a threefold increase from the U.S. low reached a decade ago, and a 22.2 percent rise just this year. It makes the United States the world’s biggest producer of crude.
Russia pumps an average of 10.8million bpd and Saudi Arabia, about 10.5million bpd.
More U.S. oil will likely come. The EIA expects output to break through 12 million bpd by mid-2019, largely thanks to a surge in shale oil production.
The record US production has been a moderating factor of oil prices, although oil got a bump on Thursday after record Chinese crude imports eased concerns that a slowdown in the world’s No.2 economy could stoke an emerging fuel glut.
However, oil markets were held back somewhat after the United States became the world’s top crude producer as its output hit record levels.
Front-month Brent crude oil futures were at $72.27 a barrel at 0800 GMT, up 21 cents, or 0.3 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at $61.95 per barrel, up 28 cents, or 0.4 percent, from their previous settlement.
China’s October crude imports surged 32 percent from a year earlier to 40.80 million tonnes, or 9.61 million barrels per day (bpd), data from the General Administration of Customs showed on Thursday, climbing from 9.05 million bpd in September. The previous daily record of 9.6 million bpd was touched in April 2018.
Imports rose 8.1 percent for the first 10 months of the year from the same period last year to 377.16 million tonnes, or 9.06 million bpd, on track for another record year of shipments.
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“Crude oil imports rose … as uncertainty around tariffs on U.S. imports and sanctions on Iran eased,” said ANZ bank following the data release.
“We also saw demand from China’s independent refineries rise,” it added.
Meanwhile, U.S. crude inventories rose by 5.8 million barrels in the week ending Nov. 2, to 431.79 million barrels, the EIA said..
Production has not just risen in the United States, but also in many other countries, including Russia, Saudi Arabia, Iraq and Brazil, stoking producer concerns of a return of oversupply that depressed oil prices between 2014 and 2017.
With output overall rising, supply is ample despite the Iran sanctions now in place, prompting rumblings within the Middle East dominated Organisation of the Petroleum Exporting Countries (OPEC) that renewed supply cuts may be needed next year to prevent a glut.
“OPEC and Russia may use cuts to support $70 per barrel,” said Ole Hansen, head of commodity strategy at Saxo Bank.