The United States has been a net energy consumer for decades, consuming more energy than it produces. However, a sharp increase in oil and gas production as a result of the shale boom, as well as the ongoing renewable energy revolution, have helped change energy trajectories over the past 15 years. And now the U.S. Energy Information Administration (EIA) has reported that U.S. energy production exceeded consumption by record levels in 2023.
According to the EIA, U.S. energy production increased 4% to nearly 103 quadrillion British thermal units (quads) in 2023, a record for the country. Energy consumption, on the other hand, fell 1% to 94 quads over the same period, meaning production exceeded consumption by 9 quads, the largest difference since 1949.
Dry natural gas production increased 4% in 2023 and 58% since 2013, while crude oil production increased 9% since 2022 and 69% since 2013. At the same time, renewable energy production increased 1% year-on-year and 28% since 2013, reaching eight quads of energy. Solar energy production recorded an impressive 15% year-on-year growth in 2023, while wind energy production declined 2%.
On the other hand, energy consumption in the US fell by 1%, mainly due to a 17% drop in coal consumption. Demand for coal has been on a downward trend for years and is at its lowest level in more than a century. This is mainly due to coal’s decreasing contribution to electricity generation due to its high carbon footprint.
Related: Oil and gas drilling activity in the US collapses
“Natural gas production has continued to rise despite lower prices because natural gas is a byproduct of crude oil production, particularly in the Permian Basin, which accounts for nearly half of U.S. crude oil production.” said Chris Higginbotham, an EIA spokesman.
Source: US Energy Information Administration
Oil price rally continues
The oil price rally, which had eased in recent weeks on demand concerns, is now back on track. Brent crude oil rose to $86.39 a barrel in intraday trading on Friday from $77.52 on June 4, while WTI rose to $91.58 from $73.25 a barrel, with oil demand beating expectations. According to commodity analysts Standard Chartered, global oil demand averaged 101.77 million barrels per day (mb/d) in April, 470,000 barrels per day (kb/d) above previous forecasts. StanChart has reiterated its forecast that oil demand will hit an all-time high in June. The demand forecast for May was revised upwards by 0.2 mb/d to 103.3 mb/d and the forecast for June was revised upwards by 0.3 mb/d to 104.1 mb/d.
Meanwhile, the big natural gas rally that began at the end of April has taken a breather.
European natural gas futures traded in a narrow range around 35 euros per peso.R Megawatt hour as traders balance adequate storage levels against supply concerns. The long trend of below-average stockpiling in EU gas inventories continues, with inventories losing ground on 57 of the last 62 days compared to the five-year average. According to the latest data from Gas Infrastructure Europe (GIE), inventories stood at 85.25 billion cubic metres (bcm) on 16 June, down 0.06 bcm from a year ago and 12.93 bcm above the five-year average. The w/w build was 1.75 bcm, 1 bcm below the five-year average. The move away from extreme surplus, along with concerns about the viability of remaining Russian flows to the EU, is helping to support Dutch Title Transfer Facility (TTF) prices in the front month. European gas prices have settled in the range of EUR 33 to 36 per megawatt hour (MWh) on 19 of the last 20 trading days.
US natural gas futures fell below $2.61/MMBtu in intraday trading on Friday after the EIA released a report on inventory build-ups. According to the report, US utilities added 52 billion cubic feet of natural gas to inventories last week, slightly below the expected build-up of 53 bcf. US gas inventories are now 20.6% above the seasonal average. Natural gas prices are set to fall for the third consecutive day on increased production, as higher prices in recent weeks have hurt producers such as EQT Corp. (NYSE:EQT) and Chesapeake Energy (NASDAQ:CHK) is resuming drilling. Gas production in the continental 48 states averaged 98.6 billion cubic feet per day (bcfd) in June, up from a 25-month low of 98.1 bcfd in May. On the demand side, hotter than normal weather is expected through at least July 12, so gas use for cooling purposes will remain high.
By Alex Kimani for Oilprice.com
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