Petroleum products

U.S. crude oil production
We forecast U.S. crude oil production will grow by 2% in 2024 and average 13.2 million barrels per day (b/d) for the year and a further 4% in 2025. If our forecast is realized, U.S. crude oil production would set new annual records in both 2024 and 2025.

In Table 4a of the June STEO, we introduce more detail for the regional breakout of our U.S. crude oil production forecast. Comparing the regions, we forecast the Permian region, mostly in Texas, will contribute almost two-thirds of all U.S. crude oil production growth through December 2025. This share continues a decade-long trend of the Permian region leading crude oil production growth in the United States. The Permian region’s proximity to crude oil refining and export terminals on the Gulf Coast, established takeaway capacity, and improved new well productivity support crude oil production growth in the region. The Egale Ford and the Federal Offshore Gulf of Mexico regions will contribute the second- and third-largest shares (15% each).

In Table 10a of the June STEO, we introduce data on drilling productivity metrics formerly published in our Drilling Productivity Report. Recent data on crude oil production from newly completed wells suggest operators in the Permian, Eagle Ford, and Bakken regions have noticeably increased their productivity on a per-rig basis over the past 18 months.

Distillate crack spreads
Distillate crack spreads (the difference between the wholesale price of diesel and crude oil) in April and May averaged almost 50 cents per gallon (gal), close to recent lows seen in January 2022. Less-than-usual distillate consumption over the last few months is the primary cause of recent narrowing in distillate crack spreads. We forecast distillate crack spreads will remain lower than last year through the summer and will then increase toward the end of the year when more distillate is used for heating and the corn harvest. We expect distillate crack spreads to increase to about 75 cents/gal in 4Q24, which is still about 10 cents/gal less than in 4Q23. In 2025, we forecast distillate crack spreads will increase overall as some refinery capacity comes offline and lower-than-average distillate inventories keep upward pressure on prices.

We estimate U.S. consumption of distillate fuel decreased about 5% during the first five months of 2024 compared with the same period last year. However, we expect the United States will consume 1% more distillate fuel in 2H24 than it did in 2H23, as some of the factors that have been limiting consumption early this year recede. On-highway trucking—the single-largest end use of distillate fuel oil—has been subdued since the start of the year as measured by the American Trucking Association’s truck tonnage index. We expect manufacturing activity will increase over the next 18 months, supporting trucking demand and increasing distillate consumption.

At the same time, we expect increasing substitution of biofuels in place of petroleum distillate will continue as renewable diesel production increases, which could limit consumption of petroleum-based distillate. Renewable diesel and biodiesel grew as a share of total distillate consumption from 5% in 2021 to 7% in 2023. We forecast the share of distillate consumption made up of biofuels will increase to 9% in 2024.