We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
U.S. to Break Crude Production Record This Year and Next
Read MoreHide Full Article
The U.S. Energy Information Administration (“EIA”) is optimistic about the future of domestic crude production, projecting a remarkable surge in 2024 and 2025. According to the agency’s Short-Term Energy Outlook (“STEO”), the forecast predicts a substantial increase of 290,000 barrels per day (bpd) in 2024, propelling production to 13.21 million bpd.
This upward trajectory continues into 2025, with an estimated record-breaking output of 13.44 million bpd. The primary driver behind this growth is the enhanced efficiency of well operations, reinforcing the nation's standing as a dominant force in the global oil market.
APA Corporation (APA - Free Report) , Diamondback Energy (FANG - Free Report) and Marathon Oil (MRO - Free Report) are some of the crude finding firms that could stand to benefit from this production boom.
Supply Concerns Very Much on the Table
Despite the positive outlook, concerns loom on the global stage regarding rising oil supplies. Industry watchers believe that an uptick in oil output by OPEC members has contributed to uncertainties in the market. While leader Saudi Arabia saw its output shrink, as mandated by the production cut agreement, there was more oil coming from Iraq and Africa. Saudi Arabia's strategic move to lower the official selling price of Arab Light crude to Asia is seen as a response to the confluence of increased supply and weakened demand for lighter crudes, prompting investors to approach the market with caution.
Global Liquid Fuels Production Growth to Revive in 2025
The EIA's projection includes a predicted slowdown in global liquid fuels production growth in 2024, attributing it to OPEC's deliberate supply restraint. However, a rebound is anticipated in 2025, with a substantial projected increase of 1.6 million bpd. This delicate interplay between production and demand continues to shape the complex landscape of the global energy market.
U.S. as a Key Player Amidst Uncertainties
Against this backdrop, the United States maintains its pivotal role in the global energy arena. The nation's resilience in oil production, amid a landscape of uncertainties, positions it as a significant contributor to fulfilling international energy needs. With the forecast surge in U.S. petroleum and liquid fuels consumption suggesting 20.4 million bpd in 2024, the nation stands poised to play a vital role in supporting the ever-growing global energy demands.
Challenges Impeding America’s Oil Independence
However, challenges persist on the path to U.S. oil independence. Despite achieving record oil production levels, becoming a net exporter remains a multifaceted challenge. Limitations in energy infrastructure, particularly the absence of crucial crude oil pipelines connecting major oilfields to east coast refineries, present substantial obstacles. Additionally, the emphasis on heavy crude oil grades, not within the U.S. shale sector's production portfolio, adds complexity to the pursuit of complete energy independence.
Forecasting the Impact on Oil Prices
Looking ahead, as U.S. crude production gears up for unprecedented heights, the global oil market braces for potential impacts on prices. The EIA forecasts Brent crude prices to average $82 per barrel in 2024, with a marginal dip to $79 in 2025. While the United States secures its role as a leading oil producer, the intricate balance between production, global demand, and geopolitical factors will undoubtedly mold the future trajectory of oil markets.
What Should the Investors Do?
With U.S. crude production setting new records, investors interested in the Oil/Energy space might hold on to some fundamentally strong upstream-focused stocks like APA Corporation, Diamondback Energy and Marathon Oil. Each of these carries a Zacks #3 Rank (Hold).
APA Corporation: It is one of the world's leading independent energy firms engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. Geographically, the company’s operations are in the United States, Egypt and the North Sea of the United Kingdom. APA also holds acreage in offshore Suriname (South America) and other international locations.
Diamondback Energy: Midland, TX-headquartered Diamondback Energy is an independent oil and gas exploration & production company with its primary focus on the Permian Basin, where it has around 491,000 net acres. Its activities are concentrated in the Wolfcamp, Spraberry and Bone Spring formations.
Marathon Oil: Marathon’s oil and gas operations are mainly concentrated in the United States (primarily Oklahoma, Eagle Ford, Bakken and Northern Delaware) and Equatorial Guinea. Overall, the wells drilled by Marathon have extremely low oil price breakeven costs and need oil prices of just $35 a barrel to be profitable.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
U.S. to Break Crude Production Record This Year and Next
The U.S. Energy Information Administration (“EIA”) is optimistic about the future of domestic crude production, projecting a remarkable surge in 2024 and 2025. According to the agency’s Short-Term Energy Outlook (“STEO”), the forecast predicts a substantial increase of 290,000 barrels per day (bpd) in 2024, propelling production to 13.21 million bpd.
This upward trajectory continues into 2025, with an estimated record-breaking output of 13.44 million bpd. The primary driver behind this growth is the enhanced efficiency of well operations, reinforcing the nation's standing as a dominant force in the global oil market.
APA Corporation (APA - Free Report) , Diamondback Energy (FANG - Free Report) and Marathon Oil (MRO - Free Report) are some of the crude finding firms that could stand to benefit from this production boom.
Supply Concerns Very Much on the Table
Despite the positive outlook, concerns loom on the global stage regarding rising oil supplies. Industry watchers believe that an uptick in oil output by OPEC members has contributed to uncertainties in the market. While leader Saudi Arabia saw its output shrink, as mandated by the production cut agreement, there was more oil coming from Iraq and Africa. Saudi Arabia's strategic move to lower the official selling price of Arab Light crude to Asia is seen as a response to the confluence of increased supply and weakened demand for lighter crudes, prompting investors to approach the market with caution.
Global Liquid Fuels Production Growth to Revive in 2025
The EIA's projection includes a predicted slowdown in global liquid fuels production growth in 2024, attributing it to OPEC's deliberate supply restraint. However, a rebound is anticipated in 2025, with a substantial projected increase of 1.6 million bpd. This delicate interplay between production and demand continues to shape the complex landscape of the global energy market.
U.S. as a Key Player Amidst Uncertainties
Against this backdrop, the United States maintains its pivotal role in the global energy arena. The nation's resilience in oil production, amid a landscape of uncertainties, positions it as a significant contributor to fulfilling international energy needs. With the forecast surge in U.S. petroleum and liquid fuels consumption suggesting 20.4 million bpd in 2024, the nation stands poised to play a vital role in supporting the ever-growing global energy demands.
Challenges Impeding America’s Oil Independence
However, challenges persist on the path to U.S. oil independence. Despite achieving record oil production levels, becoming a net exporter remains a multifaceted challenge. Limitations in energy infrastructure, particularly the absence of crucial crude oil pipelines connecting major oilfields to east coast refineries, present substantial obstacles. Additionally, the emphasis on heavy crude oil grades, not within the U.S. shale sector's production portfolio, adds complexity to the pursuit of complete energy independence.
Forecasting the Impact on Oil Prices
Looking ahead, as U.S. crude production gears up for unprecedented heights, the global oil market braces for potential impacts on prices. The EIA forecasts Brent crude prices to average $82 per barrel in 2024, with a marginal dip to $79 in 2025. While the United States secures its role as a leading oil producer, the intricate balance between production, global demand, and geopolitical factors will undoubtedly mold the future trajectory of oil markets.
What Should the Investors Do?
With U.S. crude production setting new records, investors interested in the Oil/Energy space might hold on to some fundamentally strong upstream-focused stocks like APA Corporation, Diamondback Energy and Marathon Oil. Each of these carries a Zacks #3 Rank (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
APA Corporation: It is one of the world's leading independent energy firms engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. Geographically, the company’s operations are in the United States, Egypt and the North Sea of the United Kingdom. APA also holds acreage in offshore Suriname (South America) and other international locations.
Diamondback Energy: Midland, TX-headquartered Diamondback Energy is an independent oil and gas exploration & production company with its primary focus on the Permian Basin, where it has around 491,000 net acres. Its activities are concentrated in the Wolfcamp, Spraberry and Bone Spring formations.
Marathon Oil: Marathon’s oil and gas operations are mainly concentrated in the United States (primarily Oklahoma, Eagle Ford, Bakken and Northern Delaware) and Equatorial Guinea. Overall, the wells drilled by Marathon have extremely low oil price breakeven costs and need oil prices of just $35 a barrel to be profitable.