Total U.S. oil production has plunged by close to 40% — the most ever — as an unprecedented cold blast freezes well operations across the central U.S., according to traders and industry executives with direct knowledge of the operations.
Crude output has now fallen by more than 4 million barrels a day nationwide, they said, asking not to be identified because the information isn’t public. Before the cold snap, the U.S. was pumping about 11 million barrels a day, according to government data. The estimate of oil production losses has climbed steadily over the last three days as companies and traders assess the situation.
Not only do traders and executives now believe losses are larger than previously expected, they also fear they will be longer lasting. The Permian basin — America’s biggest oil field — is the region worst affected, with output down between 65% and 80% from normal levels, traders and executives said. Read more…..
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Damien Courvalin, head of energy research at Goldman Sachs, says there are three reasons why oil prices have risen recently: Saudi Arabia’s unexpected production cut, the prospect of more stimulus in the U.S. leading to more fuel demand, and discipline by shale producers.