U.S. crude oil production hit a record high in September, but key demand data is "missing."

U.S. crude oil production hit a record high in September, but key demand data is "missing."

According to the "Petroleum Supply Monthly" released by the U.S. Energy Information Administration (EIA), in September, U.S. crude oil daily output climbed to a record high of over 13.8 million barrels. This level is about 350,000 barrels per day higher than EIA's weekly estimate, indicating that despite weakening oil prices, crude oil production remains strong.

In September, U.S. total liquid fuel production rose to a record 21.7 million barrels per day, an increase of 1.1% from the previous month.

On the demand side, with the end of the summer driving season, U.S. gasoline demand dropped in September, and aviation fuel demand also cooled off:

  • Gasoline demand: 8.952 million barrels per day in September, lower than August's 9.226 million barrels per day; previous estimate was 8.755 million barrels per day.
  • Aviation fuel demand: 1.71 million barrels per day in September, lower than August's 1.819 million barrels per day; previous estimate was 1.651 million barrels per day.
  • Diesel demand: 3.769 million barrels per day in September, slightly lower than August's 3.772 million barrels per day; previous estimate was 3.736 million barrels per day.

Behind the Data

Analysis points out that U.S. crude oil production set another record in September, but the bigger takeaway from this month's "Petroleum Supply Monthly" is what the report does not contain—the real export data:

Because the U.S. Census Bureau was unable to release September trade data during the government funding gap, the EIA had to repeat the August export numbers in the September balance sheet. This missing link affects almost every indicator analysts try to glean from monthly data—from product supply, to deducing demand, to net imports.

In other words, September's "demand" figures are essentially placeholders until the Census Bureau provides new data.

However, at least the production side is real:

U.S. crude oil production in September increased slightly by 44,000 barrels per day, reaching 13.84 million barrels per day and setting a new record, once again illustrating that weak oil prices have not slowed the U.S. production machine.

New Mexico reached a record 2.351 million barrels per day, and Gulf of Mexico production rose to nearly 2 million barrels per day, the strongest level since before the pandemic.

As the Permian Basin approaches its "comfortable upper limit" of production, longer-cycle offshore projects are now taking on more of the production increase burden.

Analysis points out that normally, the EIA's "Petroleum Supply Monthly" helps clarify the noise in weekly data, but since the export data is "frozen," product supply figures appear artificially depressed, adjustment items are larger than they should be, and net imports have almost no reference value. EIA states that once the Census Bureau provides the real numbers, it will re-issue the data for that month.

For the EIA, this is the worst possible timing to lack export data. The market is already obsessed with the narrative of oversupply: from internal OPEC+ debates over baseline output, to warnings from J.P. Morgan; from the slowing U.S. shale growth but Gulf of Mexico filling the gap, to IEA’s surplus forecasts.

The current demand picture is not real at all. Analysts can only wait for another cycle to get the truly crucial numbers: how much of the record production was actually exported.

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