More than 2.2 million b/d of US oil production has been shut in response to low prices and weak demand, US Energy Secretary Dan Brouillette said.
“We’ll probably see that climb a little bit more before we start to see the demand curve pick up again,” Brouillette said during a teleconference meeting of the Secretary of Energy Advisory Board.
“Hopefully that will allow us to stabilize this recovery and also begin the process of perhaps increasing our production and seeing this industry come back as strong as it was pre-pandemic and hopefully even stronger,” he added. “It’s very important that we see this energy industry come back to pre-pandemic levels.”
US Energy Information Administration data released Wednesday showed US production at 11.5 million b/d last week, down 1.6 million b/d from March 13.
Brouillette said the US’ status as the top global oil producer gave President Donald Trump leverage to negotiate a deal to end the March oil price war between Saudi Arabia and Russia.
“Had we not been in the position that we were in … there was no way that he could have engaged in the way that he did,” he said.
STILL ROOM IN SPR
On the administration’s efforts to fill the Strategic Petroleum Reserve while oil prices are low, Brouillette said DOE may seek to negotiate additional rental contracts with oil producers to store private supplies in the government caverns.
In March, Democrats in Congress blocked DOE’s request for $3 billion to buy US crudes for the SPR. DOE then switched to a rental plan that resulted in nine companies negotiating to store a total of 23 million barrels in the government stockpile. Renters include Chevron, ExxonMobil, Energy Transfer, Vitol, Atlantic Trading, Alon USA, Equinor Marketing & Trading, Mercuria Energy America, and MVP Holdings.
SPR stocks grew 1.9 million barrels last week to 641.6 million barrels, for a total addition of 6.7 million barrels since April 17, according to EIA data. With current authorized capacity of 714 million barrels, the stockpile has room for another 72.4 million barrels.