US Oil Production Hits Record High, OPEC & Friends Announce Cuts

Energy futures are hovering near break-even levels to start Thursday’s trading after some bearish fundamental data pushed prices lower Wednesday.

OPEC & Friends announced this morning that they’d agreed to extend their original production cuts of 1.65 million barrels/day through the end of 2026, and the incremental adjustments announced a year ago through March of 2025. Those extensions were largely expected in the face of sluggish global demand and have not spurred energy futures into a major price move, one way or another. The statement also included promises to produce less to actually cut back for real this time.

US oil production was estimated by the EIA to hit a record high of 13,513,000 barrels/day last week, reflecting the agency’s new policy of rounding its production estimate to the closest thousand, rather than rounding to the nearest 100,000. That record high production and a surge in imports were not enough to increase commercial crude oil stocks, as the government’s adjustment factor “lost” nearly 5 million barrels week on week, and refinery runs cranked up across all 5 PADDs.

Refiners seem to be playing a game of chicken heading into the winter, ramping up rates across the country above their seasonal range with margins already hovering near breakeven levels in several regions, and the worst of the winter demand doldrums still ahead. Diesel production in the US was 5.3 million barrels/day last week, outpaced domestic consumption by more than 1.8 million barrels/day, and even a busy export schedule wasn’t enough to keep inventories from seeing a large build.

Gasoline stocks increased for a 3rd straight week, despite the tick higher in demand heading into Thanksgiving. PADD 1 inventories accounted for essentially all of the increase in inventories last week, which should put downward pressure on calendar spreads that had seen strength in recent months.