Oil production: U.S. oil drillers ramp up output amid higher prices projection

U.S. oil drillers are pumping more crude as international prices remain elevated amid supply uncertainty and demand strength.

Per industry experts,  continuing supply chain disruptions and labour shortages are being trumped by optimism about demand, and analysts are revising their U.S. oil output forecasts upward.

According to consultancy East Daley Capital, the U.S. will end 2022 with oil production averaging 12.86 million bpd, increasing 1.29 million bpd from 2021. Most of this will come from the Permian Basin, the star performer of the shale patch.

According to pipeline operator Enterprise Products Partners, U.S. oil production will reach 12.4 million bpd this year, up by 800,000 bpd from 2021.

At the same time, the Energy Information Administration recently revised down its U.S. oil production growth this year, saying it expects the national total at 12.1 million bpd at the end of 2022, versus earlier projections of 12.3 million bpd.

The EIA noted higher production costs, higher labor costs, and inflationary pressures as the reasons behind its revision of output growth.

“The supply-chain issues and shortage of materials are unprecedented,” said one industry respondent to the quarterly Dallas Fed survey of the oil industry.

“We are also facing serious workforce issues because a meaningful portion of the labor force left the industry during the downturn and due to the vilification of the oil and gas industry.”