US oil production at 43-year high as OPEC prepares to meet

U.S. oil production surged to a 43-year high, despite a price war that resulted in a more than 50 percent reduction in active U.S. oil wells.

Oil prices saw downward pressure in volatile trade Thursday morning, after the Department of Energy reported a draw down in crude inventories of 2.8 million barrels for the week ended May 22.

The DOE also reported that U.S. production rose to 9.566 million barrels per day, surpassing the previous peak of 9.422 million set in March. While no weekly data is available beyond 1983, the production number is the highest, if translated to a monthly basis, since May 1972.

From a supply and demand standpoint, record production in the United States and record production of 10.3 million barrels a day from Saudi Arabia in April continue to confirm that global supplies are ramping up in the face of lower prices, not falling.

The Organization of the Petroleum Exporting Countries has adopted a market-based pricing strategy that it hoped would shake out high cost producers. One such high cost producer is the U.S. shale industry, which dramatically boosted world production in recent years.

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