Since mid-2022, due to the sharp drop in oil prices, drilling platforms and well completion personnel have been idle for a long time. Now, the production of oil and gas in the USA has finally shown signs of stability.
According to the latest data from the US Energy Information Administration (EIA), in March 2024, the national crude oil and condensate production approached 13.2 million barrels/day. However, it is worth noting that this data has not shown net growth since October 2023, indicating that the trend of production surge has ended after the end of the COVID-19 pandemic and the gradual reduction of the impact of the Russia-Ukraine conflict.
Specifically, the oil production in 48 states in the United States (excluding the federal waters of the Gulf of Mexico) in March increased by less than 500,000 barrels/day compared with the same period last year, which is in stark contrast to the increase of as much as 900,000 to 1 million barrels/day in the second half of 2023. This slowdown is attributed to the gradual reduction of the driving force of high prices before 2022.
After inflation adjustment, the US futures price reached a high of $124/barrel in June 2022 and fell to about $81/barrel in December 2022. About 10 to 12 months later, the production began to stabilize or decline, which is consistent with the historical pattern of price and production changes.
Unusual weather in December 2023 and January 2024 has obscured the clear signs of improvement in US oil production, distorting year-on-year data. However, as the weather returned to normal in March 2024, the lack of net growth in the past six months became apparent.
As for oil prices, the average US futures price in May and June 2024 ranged from $73 to $78/barrel. At the current price level, there is no clear indication that production will increase or decrease. The number of oil drilling platforms has also decreased from a cyclical peak of 623 in December 2022 to an average of only 497 in May 2024. If the futures price remains near the current level, it is expected that US production will remain basically stable until at least mid-2025.
At the same time, the natural gas market has also experienced similar adjustments. Since mid-2022, the sharp drop in natural gas prices has led to a stagnant growth in production. In March 2024, dry gas production averaged about 102.6 billion cubic feet/day, which is almost the same as the 102.9 billion cubic feet/day in March 2023. It is reported that dry gas refers to the associated natural gas in oil fields, and its main component after dehydration, purification, and light hydrocarbon recovery process to extract LPG and light oil is methane-based processed natural gas.
Affected by this, the number of natural gas drilling has dropped from a cyclical high of 162 in September 2022 to an average of 115 in March 2024, and further reduced to an average of only 101 in May 2024. Unless the price rebound unexpectedly, it is expected that the production in the remaining time of 2024 and 2025 will remain basically stable, which will help the market gradually return to balance.
Taking into account the trend of stable or declining production, the strong natural gas combustion of power generators this summer, the expectation of colder weather next winter, and the increase in liquefied natural gas exports, it is expected that the excess inventory will be effectively digested before the end of the winter of 2024/25.
In 23, the company's overall sales volume was 18,000 kiloliters, a year-on-year increase of 28.10%, which is a significant growth. In terms of product structure, the operating income of 10-30 billion yuan products is 401/1288/60 million yuan respectively.