Crude output in Texas surged to a record in May just as US demand climbed to a fresh seasonal peak.Texas production, which accounts for about 40% of the nation’s crude oil output, climbed to 5.49 million barrels a day in the period, the highest in monthly government data going back to 1981. Meanwhile, oil demand in the US surged to 20.8 million barrels a day, the highest-ever seasonal level, according to Energy Information Administration figures released Monday.The surge in consumption is striking given that it came while markets were gripped by weakening demand prospects amid rising interest rates. West Texas Intermediate futures prices plunged more than 11% in May, but have since recovered to trade above $80 a barrel.The monthly oil demand figures are 4% higher than what the EIA’s weekly estimates showed. The jump was led by an increase in the country’s use of natural gas liquids, largely for petrochemical processes that make plastics. Demand for ethane in particular soared to a record high at 2.2 million barrels a day.
US gasoline demand slipped below year-ago levels in May, even as the government agency revised consumption higher from the weekly estimates. Summer fuel use this year is widely expected to outstrip levels seen at the same time in 2022 while still lagging pre-pandemic peaks.
On the supply front, while most explorers have slowed their pace of drilling, companies have been turning on drilled-but-uncompleted wells, known also as DUCs, and that’s been helping to raise output.
The rise in production in Texas, which makes up a large chunk of the prolific Permian Basin, is coming at a time when global supplies are in deficit following cuts from Saudi Arabia and its OPEC allies. As oil majors ramp up operations in the US, output from Texas is likely to grow further. Oil and gas production from Exxon’s Permian wells reached a record equivalent of 622,000 barrels during the April-to-June period and is on track to increase 10% this year.
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