LONDON - U.S. oil and gas production are finally showing signs of flattening out as drilling rigs and well completion crews have been idled in response to the retreat in prices since the middle of 2022.

Nationwide crude and condensates production was running at almost 13.2 million barrels per day (b/d) in March 2024 according to the latest data from the U.S. Energy Information Administration (EIA).

However, there had been no net growth since October 2023, indicating the surge in production after the end of the coronavirus pandemic and Russia’s invasion of Ukraine had ended.

Production from the Lower 48 states excluding federal waters in the Gulf of Mexico was up by less than 0.5 million b/d in March compared with the same month a year earlier.

Growth had slowed from 0.9 million or 1.0 million b/d in the second half of 2023 as the impetus from the previous high prices in 2022 faded.

Chartbook: U.S. oil and gas production

Inflation-adjusted front-month U.S. futures prices retreated to around $81 per barrel by December 2022 (50th percentile for all months since the start of the century) from a high of $124 in June 2022 (83rd percentile).

Production started to stabilise or retreat about 10-12 months later, in line with the historic relationship between price and output changes.

Clear evidence that U.S. oil production was turning over was masked by unusual weather in December 2023 and January 2024 distorting year on year comparisons.

But with the return of more normal weather in March 2024 the lack of net growth over the last six months has become apparent.


U.S. futures prices have averaged $73-78 per barrel in May and June 2024, putting them in the 45-50th percentiles in real terms for all months since 2000.

At these prices, there is no strong signal to increase or decrease production.

The number of rigs drilling for oil fell to an average of just 497 in May 2024 from a cyclical peak of 623 in December 2022.

If futures prices remain around current levels, U.S. production is likely to remain basically flat for the rest of 2024 through at least the middle of 2025.

Lower prices and limited growth in U.S. output would create space for Saudi Arabia and its OPEC⁺ allies to reverse some of their own production cuts later this year and into 2025.


The decline in gas prices since the middle of 2022 has been even more severe and has brought all growth in production to a halt.

Dry gas production averaged 102.6 billion cubic feet per day (bcf/d) in March 2024 compared with 102.9 bcf/d in March 2023.

Dry gas production appears to have peaked at the end of 2023 and has since been trending gently but steadily lower.

Inflation-adjusted futures prices collapsed to an average of $1.75 per million British thermal units in March 2024, the lowest for more than three decades, slumping from more than $9 in August 2022.

In consequence, the number of rigs drilling for gas had fallen to an average of just 115 in March 2024 from a cyclical high of 162 in September 2022, according to oilfield services company Baker Hughes.

The number of active rigs has since fallen even further to an average of just 101 in May 2024 as major producers have scaled back drilling programmes in response to ultra-low prices.

Unless there is an unexpected rebound in prices, production is likely to remain broadly flat throughout the rest of 2024 and 2025, helping rebalance the market.

Flat or falling output, combined with strong gas combustion by generators this summer, colder weather next winter, and an increase in LNG exports, should eliminate surplus inventories before the end of winter 2024/25.

John Kemp is a Reuters market analyst. The views expressed are his own. Follow his commentary on X

(Writing by John Kemp; Editing by Susan Fenton)