U.S. oil production rose last week to the highest level since December 1996, reducing the country’s dependence on imports as new technology unlocks crude trapped in shale formations.
Output rose by 0.2 percent to 6.52 million barrels a day in the week ended Sept. 28, the Energy Department reported today. America met 83 percent of its energy needs in the first six months of the year, department data show. If the trend continues through 2012, it will be the highest level since 1991.
“The goal of energy self-sufficiency is a real one for the first time in a generation,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “It’s clearly continuing to ramp up.”
Oil fell $2.94 a barrel, or 3.2 percent, to $88.95 at 11:23 a.m. on the New York Mercantile Exchange. Futures have retreated 10 percent since reaching $99 on Sept. 14, the highest settlement in four months.
A combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies trapped in shale formations in states including North Dakota, Texas and Oklahoma. North Dakota’s output rose 26 percent this year through July, according to Energy Department data. Oklahoma advanced 4.7 percent and Texas is up 15 percent.
The same technology unleashed a boom in natural gas output from shale that propelled inventories to a record last year. A stockpile surplus helped push futures down to a decade low of $1.907 per million British thermal units in April.