WTI Crude has tumbled back to a $46 handle this morning (from over $50 on Friday) with Brexit volatility weighing on every asset class and Nigeria and Canada restart production (following rebel attacks and wildfires respectively) but as OilPrice.com's Charles Kennedy notes companies pumping oil from the Gulf of Mexico will ramp up production in coming months, propping up American output, despite efforts to curb production and raise barrel prices.
The United States currently produces 8.7 million barrels a day – a half a million less than where the figure stood last year, according to data from the Energy Information Administration (EIA).
Low prices caused by the high output levels have kept oil exploration efforts at a minimum.
Around 500,000 more barrels of crude from Mexico’s namesake gulf will go online by 2017, according to analysis by the Wall Street Journal that included government and private sector sources.
"The projects are coming faster and sometimes bigger than expected,” Roger Diwan of IHS Energy told Dow Jones. "The ramp-up seems to have accelerated during low prices.”
A handful of sizable fields had been funded for construction years prior, when prices were higher. The projects completed construction as scheduled and will begin production in the coming months.
Once the fields become operational, the U.S. Department of Energy predicts offshore oil production will set a record in 2017 with 1.91 million barrels – 24 percent more than in 2015 – flowing out of surrounding bodies of water by next December.
The year 2009 held the previous record for highest offshore oil production rate, but British Petroleum’s spill in the Gulf of Mexico later that year caused a moratorium on the category of drilling.
Mexico has also begun efforts to encourage drilling in the Gulf. A total of 21 companies, including the Who’s Who of Big Oil, have registered to take part in Mexico’s deepwater oil auction to be held in December.
Shell, Chevron, ExxonMobil, British BP, French Total SA, Spanish Repsol, Norwegian Statoil and Mexican Pemex are among the major players now registered to bid for 10 blocks in the Gulf of Mexico, Prensa Latina reports.
Some 76 percent of the country’s potential oil resources are in the Gulf of Mexico’s deep waters, according to Forbes.
Furthermore, returning production in Canada and Nigeria, combined with the Brexit result, could mean “the drop in prices in the short term may be serious,” Russia’s Novak said in an e-mailed statement. If supply isn’t restored, a return to fundamentals is likely fairly quickly, he said.
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