US crude oil production has shown notable growth recently, driven largely by private exploration and production companies in the Permian Basin. This increase follows a significant rise in West Texas Intermediate (WTI) crude oil prices, which surged from around $60 per barrel to over $90 due to supply concerns linked to the closure of the Strait of Hormuz. Private operators have been quick to respond to these market signals by ramping up drilling activity, pushing the Permian rig count to its highest level since September 2025. As of mid-May, private companies like Continental, Double Eagle, Triple Crown, and VTX added rigs steadily, reflecting their agility in adjusting operations to price changes. Publicly traded companies have been slower to increase rigs but are beginning to raise their production guidance amid more favorable prices.
The responsiveness of private operators contrasts with that of public companies, which tend to move more cautiously due to shareholder pressures and long-term strategic plans. Historical data indicates a stronger correlation between WTI price changes and rig activity among private firms, with a two-month lag showing a 66% correlation compared to only 35% for public firms with a three-month lag. This trend suggests that private companies lead short-term production adjustments while public companies follow more gradually.
Meanwhile, US crude oil inventories have been declining sharply over the past two months. According to the American Petroleum Institute (API), inventories fell by 8.33 million barrels in the week ending June 12, exceeding analyst expectations. Over the last nine weeks, total crude stocks have dropped by approximately 52 million barrels. Despite this steep decline, inventories remain only slightly below levels recorded earlier this year. The Strategic Petroleum Reserve (SPR) is also being drawn down rapidly, with another 8.9 million barrels removed in the same week, lowering SPR stocks to their lowest level since 1983.
This reduction in inventories comes as US crude production reached nearly 13.8 million barrels per day for the week ending June 5, an increase from previous weeks and up significantly compared to a year ago. However, oil prices experienced a sharp drop following news of a preliminary agreement between the US and Iran to reopen the Strait of Hormuz, a critical shipping route for global oil supply. Brent crude prices fell by about $12 per barrel from the previous week, with WTI prices also dropping substantially.
Gasoline inventories showed some replenishment with an increase of about 2.5 million barrels for the week ending June 12 after prior declines, although they remain below average seasonal levels. Distillate stocks continued their downward trend and are also below five-year averages. Additionally, inventory at Cushing, Oklahoma—the delivery point for WTI futures—declined further over the reporting period.
Looking ahead, analysts expect Permian Basin rig counts to continue rising throughout the year as private operators maintain their aggressive drilling pace and public companies adjust their strategies accordingly. With geopolitical developments influencing global supply and demand dynamics, US crude oil production and inventory levels will remain key indicators for energy markets in the near term.
