Oil production in Texas dropped in June 2018 compared to the same month last year, the first yearly drop since February 2017, figures by the Railroad Commission of Texas showed on Thursday, highlighting recent concerns that the pipeline bottlenecks in the Permian may have started to negatively affect production growth.

Figures for June 2018, the latest available and still preliminary data based on production volumes reported by operators, showed that Texas’ total oil production, including crude oil and condensates, fell to 98.922 million barrels for the month, compared to 101.3 million barrels that Texas pumped in June 2017, figures by the Railroad Commission of Texas show.

For crude oil only, production fell to 88.86 million barrels in June 2018, compared to 90 million barrels in June 2017. The production initially reported to the Commission for June 2017 was 75.254 million barrels of crude oil, but was later updated to the current figure of 90 million barrels, the Commission said, noting that the June 2018 figures are preliminary.

The Permian production exceeding pipeline takeaway capacity has depressed the prices of Midland, Texas, crude compared to the price of the grade at Houston. Related: New Crude-By-Rail Service Aims To Ease Permian Bottlenecks

Midland is the top crude oil producing county in Texas, and pumped 9.87 million barrels of crude in June 2018, with Karnes county a distant second with 6.84 million barrels, the Railroad Commission of Texas data showed.

This week, WTI in Midland slumped to its widest discount to WTI since August 2014, according to Reuters estimates—the price discount of WTI in Midland to the U.S. benchmark exceeded $18 a barrel.

The current pipeline capacity in the Permian is 3.1 million bpd. The EIA estimates that the Permian will have pumped 3.387 million bpd in August, expecting production to rise to 3.421 million bpd in September. As a result of the wide WTI Midland discount to WTI, some Texas producers have been delaying the completions of wells, which is boosting the number of drilled but uncompleted wells (DUCs). In the Permian, the number of DUCs rose to 3,470 in July, up by 167 compared to June.

By Tsvetana Paraskova for Oilprice.com

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