North Dakota’s oil production slipped a bit in March but still came in above forecasts made earlier this year, staying above the 1 million barrels-per-day mark.
The state churned out 1.025 million barrels per day in March, down about 1 percent from February, according to data released Friday by the North Dakota Department of Mineral Resources released Friday. North Dakota is the nation’s second largest oil producing state.
The rig count, which measures the number of rigs drilling new oil wells, currently stands at 51 in North Dakota, up from 50 in April and 46 in March. A key gauge, the rig count has risen from 39 in February.
North Dakota’s natural gas production also perked up in March, rising 1.5 percent over February.
North Dakota’s monthly oil production hit an almost three-year low in December of 942,326 barrels per day and remained below the 1 million barrels-per-day mark in January. The state minerals department had forecast that production might remain below 1 million barrels for several months into 2017.
But Friday, Lynn Helms, the mineral department’s director, said that production should stay above 1 million barrels per day — "as long as oil prices don’t take a dive.”
West Texas Intermediate, which sets the benchmark price for U.S. crude oil, had been mostly trading between $50 and $56 a barrel from mid-December to late April. Oil producers in North Dakota need WTI prices of $50 to $60 per barrel to increase their activity.
But WTI prices have been below $50 per barrel for the past three weeks and are currently about $48. Prices have been depressed by high global oil stockpiles and increased production in Libya and Nigeria — and in the U.S. oil shale fields, notably the Permian Basin in Texas and New Mexico.
OPEC is scheduled to meet on May 25 to decide whether to extend production cuts that it made last fall.
The conventional wisdom in the oil industry is that the cartel will do so.
“They have an enormous decision to make,” Helms told reporters in a monthly conference call.
If OPEC doesn’t extend production cuts, analysts have been forecasting a fall in the WTI price to a floor of $40 per barrel, Helms said. “That would really put things back in neutral again.”