As crude oil prices continue their decline – WTI was at about $75 per barrel (bbl) on Nov. 13 – operators are on pace to boost production despite sitting on the bumpy side of the teeter-totter.

The U.S. Department of Energy (DOE) reported that oil inventories fell in the first week of November by 1.7 million barrels (MMbbl) to 378.4 MMbbl. The inventory was 380.2 MMbbl the week before.

Analysts and firms had expected inventories to grow. KeyBanc Capital Markets had estimated a supply increase of 680 Mbbl, which would have pushed inventories to 380.9 MMbbl.

“A draw in crude inventories led by the Gulf Coast plus draws in product inventories (distillate, jet, other) was slightly offset by a build in motor gasoline inventories,” said Roger D. Read, senior analyst, Wells Fargo Securities. “Draws in Gulf and West Coast crude inventories were offset by slight builds in the other PADD regions.”

Total U.S. crude oil production averaged an estimated 9.06 MMbbl/d for the first week of November, breaking above 9 MMb/d for the first time, the U.S. Energy Information Administration (EIA) reported Nov. 12. EIA’s historical monthly data goes back to January 1983.

Richard Hastings, macro strategist, Global Hunter Securities, said estimates from the EIA show that major-play tight oil and shale gas production is continuing. The pace of oil production in the Lower 48 hasn’t slackened in seven weeks.

Hastings said U.S. production is at what he called the “gasoline parity risk threshold,” where the relationship of oil production to gasoline demand could continue to hurt crude oil prices. At parity, the production of oil volumes in barrels per day is equal to or more than the implied consumption of gasoline.

“At this point, we believe crude oil prices are nearing levels where prices should stabilize,” he said. “This means U.S. crude futures trending near $70 per barrel could begin to worry some of the Persian Gulf leaders that a prolonged slump in oil revenues is not worth watching.

“Instead they might take action over the next few months to implement a small cut to production.”

Gasoline stockpiles increased by 1.8 MMbbl, despite lower gas prices linked to Brent, according to the DOE.

The U.S. continues to ship out petroleum products at high rates. Refined product exports averaged 3.61 million barrels of oil equivalent per day (MMboe/d) in the past four weeks, compared with 3.55 MMboe/d in the previous period.

The EIA estimates that in December U.S. oil production will at least maintain current levels, with the Permian contributing 20.6% of the total followed by the Eagle Ford at 18.4% and the Bakken at 13.5%.

The most productive oil shales in the Lower 48 could set records in 2015, and even gas plays are expected to add marginal increases to oil volumes.

crude condensate production december

Major plays generated 5.26 MMbbl/d of liquids production, 58.4% of all U.S. liquids production.

Utica liquids production continues to outpace all other basins in terms of rates of change,” Hastings said.

crude production by shale play

By 2015, projected total crude oil production could average 9.4 MMbbl/d, a reduction of 0.1 MMbbl/d from EIA’s previous forecast. That level of production would still be the highest annual average since 1972.

Natural Gas

Natural gas plant liquids production is also expected to increase in 2015. The EIA said production would average 3.2 MMbbl/d in 2015 from 2.6 MMbbl/d in 2013.

gas production

The EIA estimated the Utica and Marcellus dry gas production now produces a combined 17.77 billion cubic feet per day (Bcf/d). However, Marcellus Shale growth continues to moderate, with yearly growth slowing to 7.8% compared with 33.9% in the same period a year ago.