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Brent Crude Oil Settles above $50 after US Inventory Report

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Part 3
Brent Crude Oil Settles above $50 after US Inventory Report PART 3 OF 8

Weekly US Crude Production Tests Lowest Level since 2014

Monthly US crude oil production 

The EIA (U.S. Energy Information Administration) released its monthly crude oil and natural gas production report on May 31, 2016. It reported that US crude oil production fell by 0.1% to 9.1 MMbpd (million barrels per day) in March 2016 compared to previous months. Production fell by 5.4% from 9.6 MMbpd in March 2015. US crude oil production fell the most in the federal offshore Pacific area by 48% year-over-year to 23 MMbpd in March 2016. Kansas, Mississippi, Montana, Nebraska, Utah, West Virginia, and Alabama also reported declines of over 20% in crude oil production in the same period.

Weekly US Crude Production Tests Lowest Level since 2014

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Weekly US crude oil production 

The EIA reported that weekly US crude oil production fell by 32,000 bpd (barrels per day) to 8.7 MMbpd for the week ended May 27, 2016, compared to the previous week. Production fell by 0.36% week-over-week.

Peaks and lows

Weekly US crude oil production peaked at 9.6 MMbpd in June 2015. In contrast, US crude oil production hit its lowest level in the last 20 months for the week ended May 27, 2016. Production has fallen 9.3% from its peak level of 9.6 MMbpd. Higher break-even costs and higher production costs for US oil producers compared to oil producers in the Middle East and Russia led to the decline in US crude oil production.

Low crude oil prices influence oil drillers and oil producers like Transocean (RIG), Diamond Offshore Drilling (DO), WPX Energy (WPX), CONSOL Energy (CNX), and Laredo Petroleum (LPI). For more information on US energy companies’ financial challenges, please read North American Oil and Gas Producers’ Debt Rose in 2015 and Crude Oil’s Total Cost of Production Impacts Major Oil Producers.

The volatility in crude oil prices impacts funds such as the United States Brent Oil ETF (BNO), the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the PowerShares DWA Energy Momentum ETF (PXI), the United States Oil ETF (USO), and the United States 12 Month Oil ETF (USL). 

In the next part of this series, we’ll take a look at US crude oil refinery input, crude oil imports, and crude oil production estimates.

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