In the latest quarter, ExxonMobil's oil and gas production increased 24% year over year, Chevron's production increased 7%, and Dutch Shell and British BP increased 4% and 2%, respectively. Macquarie believes that if OPEC resumes production and adds new supply from Brazil and other places, oil may fall below the $70 mark.
While OPEC is considering increasing production, European and American oil giants are reporting a sharp increase in production, posing a greater downside risk to oil prices.
In financial reports for the latest quarter, giants such as ExxonMobil and Chevron all indicated that production had increased to varying degrees. Specifically:
ExxonMobil's oil and gas production increased 24% year over year, driven by a $60 billion acquisition of Pioneer Natural Resources;
Chevron's production increased by 7%, and the company cut capital expenditure in half, but its oil and gas production is still 27% higher than ten years ago;
Dutch Shell and British BP increased production by 4% and 2%, respectively, although their net zero emissions targets were more aggressive than their US peers.
The biggest contribution to the increase in production by US oil giants came from the Permian Basin. Crude oil production in this production area needed to reach a record high in the third quarter. Analysts were pleasantly surprised by the year-on-year growth rate and efficiency improvements.
The general increase in production by the giants is putting pressure on oil prices. Weak global demand for crude oil has caused oil prices to plummet 12% in the past six months, and if OPEC continues to implement its plan to resume previous production cuts, oil prices may fall further.
Nick Hummel, an analyst at Edward D. Jones & Co in St. Louis, said, “ExxonMobil and Chevron are adhering to their core oil and gas strategies while scaling up production in some of the world's best assets. The short-term outlook for oil and gas is weak, and OPEC in particular is preparing to put more oil into the market.”
According to previous news, OPEC plans to increase oil supply to the market starting in December and restore the daily supply of 0.18 million barrels according to the original plan. However, some analysts believe that the increase in US production (currently about 50% higher than Saudi Arabia) may prevent OPEC from increasing production.
Macquarie said in a report that this oil, along with additional supplies from Guyana, Brazil and other regions, could mean “a production capacity of 5 million b/d by 2025, which is currently not being produced.” They said this was in the context of “relatively weak” demand growth.
The agency predicts that, unless a major geopolitical event occurs, Brent crude will fall below $70 per barrel from the current level of around $73 per barrel.
