U.S. oil production forecasts are being revised upwards despite labor and supply chain constraints as higher prices spur more drilling and well completion activity, according to industry experts.

Calls for new oil supplies are being answered by more producers as U.S. prices stay above 100 per barrel, propelled by Russia39;s invasion of Ukraine. Prices are up 70 yearoveryear, offsetting worries of a second pandemic price drop and inflation.

U.S. output will end the year up 1.29 million barrels per day bpd, at 12.86 million bpd, according to consultancy East Daley Capital, which closely tracks energy supplied to U.S. pipelines. Its latest forecast increase is roughly 300,000 bpd, or 23, higher than in its December outlook.

The bulk of the projected annual rise 1.13 million bpd comes from the Permian Basin, the top U.S. shale field that has propelled the United States to an energy powerhouse. There were 332 oil rigs drilling there last week, the most since April 2020.

U.S. oil prices are 30 to 40 per barrel higher than late last year and rig counts are becoming more responsive to that price movement, said AJ O39;Donnell, a director at East Daley Capital.

PROFITS AT HALF THE LEVEL

At 104 per barrel , oil is roughly twice what Permian Basin producers said was needed to profitably drill wells, according to a Federal Reserve Bank of Dallas survey. 

March filings for drilling permits there hit 904, a monthly high, which reflects a robust expansion for horizontal…