Oil: Is Climbing U.S. Production About to Peak?

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Since October 2016, U.S. crude oil production has surged by over one million barrels per day, replacing more than two-thirds of what the Organization of Petroleum Exporting Countries (OPEC) was supposed to cut to shore up prices.  However, it looks like the growth in U.S. production is quickly running out of steam (Figure 1) and, all else being equal, this should be good news for OPEC and the price of oil.  Those hoping to see a continued rise in U.S. production should have two immediate concerns:

  • The number of operating oil rigs has stopped growing (Figure 1)
  • The marginal productivity of operating oil rigs is falling quickly (Figure 2)
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