Crude Output Exceeds Imports for First Time in 16 Years

U.S. domestic crude-oil production exceeded imports last week for the first time in 16 years, a government report showed.

Output was 32,000 barrels a day higher than imports in the seven days ended May 31, according to weekly data today from the Energy Information Administration, the Energy Department’s statistical arm. Production had been lower than international purchases since January 1997.

A combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies trapped in shale formations in states including North Dakota, Oklahoma and Texas. The surge in oil and gas production helped the U.S. meet 88 percent of its own energy needs in February, the highest monthly rate since April 1986, EIA data show. Crude inventories climbed to the highest level in 82 years in the week ended May 24.

“It will help U.S. energy independence and help our trade balance quite a bit,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “You have to wonder if you are going to see downward pressure on prices.”

The U.S. pumped 7.3 million barrels a day of oil last week, up 8,000 barrels from the prior week, the EIA said in its Weekly Petroleum Status Report. Imports fell 549,000 barrels a day last week to 7.27 million.

Stockpiles slid 1.6 percent to 391.3 million barrels last week as imports dropped and refineries used more crude to produce fuels. Supplies reached 397.6 million barrels in the week ended May 24, the highest level since 1931.

Trend Extension

“This is an extension of trends that have been well established over the last few years,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “The U.S. market is much more comfortably supplied than a few years ago. We have a reduced need for imports.”

Production climbed 42 percent over the past five years and reached a 21-year high of 7.37 million barrels a day in the week ended May 3. Imports have tumbled 26 percent since May 2008.

Crude futures for July delivery gained 43 cents, or 0.5 percent, to settle at $93.74 a barrel on the New York Mercantile Exchange. Prices have slumped 35 percent since settling at an all-time high of $145.29 on July 3, 2008.

U.S. petroleum imports fell to $29.6 billion in April, the lowest level since November 2010, the Commerce Department reported yesterday.

OPEC Unease

The Organization of Petroleum Exporting Countries signaled growing unease with the U.S. oil boom and started a study into shale at a ministerial meeting last week in Vienna at which it also left supply targets unchanged.

The committee will consider the effect of shale oil on the global market for OPEC crude “in the not-too-distant future,” Nigerian Petroleum Minister Diezani Alison-Madueke said on May 31 after the ministers met. “It is a concern.”

Increased U.S. production has particularly affected imports from Africa, which typically produce lighter grades of oil similar to the North American blends. Imports to the U.S. from Nigeria tumbled to a record low in February, based on EIA data going back to 1995. Shipments from Angola dropped to the lowest level since 1993 in March.

Saudi Arabian deliveries fell to a three-year low in January and Venezuelan imports slid to the lowest level in 10 years in February.

“It’s a bit worrisome for the outlook in the Middle East and countries like Venezuela which highly rely on energy exports,” Lynch said.

To contact the reporter on this story: Moming Zhou in New York at mzhou29@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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