U.S. Energy Information Administration (EIA) estimates U.S. total crude oil production averaged 8.3 million barrels/day (bbl/d) in April 2014, which would be the highest monthly average production since March 1988.
U.S. total crude oil production, which averaged 7.4 million bbl/d in 2013, is expected to increase to 8.5 million bbl/d in 2014 and 9.2 million bbl/d in 2015. The 2015 forecast represents the highest annual average level of production since 1972.
Most of the increased production flows from the tight oil formations in North Dakota and Texas. Oil production in the Gulf of Mexico is also expected to rise this year and again in 2015, marking the first increase in offshore oil output in five years, according to EIA.
According to EIA, Brent crude oil spot prices averaged $108/barrel (bbl) in April. This was the 10th consecutive month in which the average Brent crude oil spot prices fell within a relatively narrow range of $107/bbl to $112/bbl. New pipeline capacity from the Midwest into the Gulf Coast helped reduce inventories at the Cushing, Oklahoma storage hub to 25 million barrels by the end of April, the lowest level since October 2009.
The discount of WTI crude oil to Brent crude oil, which averaged more than $13/bbl from November through January, fell below $4/bbl in early April. Total U.S. commercial crude oil stocks at the end of April reached a record high of nearly 400 million barrels, which is expected to put downward pressure on crude oil prices. EIA projects Brent crude oil prices to average $106/bbl in 2014 and $102/bbl in 2015 and the WTI discount to Brent to average $10/bbl and $11/bbl in 2014 and 2015, respectively.