Will US Supplies Continue to Weigh on Crude Oil Prices?
Crude oil prices
WTI (West Texas Intermediate) crude oil (XLE) (XOP) (USO) futures contracts for May delivery fell 1% and closed at $52.65 per barrel on April 17, 2017. Oil and gas are major parts of the energy sector. The energy sector contributed to ~6.6% of the S&P 500 (SPY) (SPX-INDEX) as of April 14, 2017. Broader markets like the S&P 500 and Dow Jones (DJIA-INDEX) rose 0.9%, respectively, on April 17, 2017.
On April 17, 2017, US crude oil prices had their biggest decline since March 2017 due to the following:
- estimates of a rise in US shale production in May 2017
- a rise in the US crude oil rig count to a 19-month high
- profit-booking as crude oil prices hit a six-week high on April 11, 2017
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EIA’s monthly drilling report
The EIA (U.S. Energy Information Administration) released its monthly Drilling Productivity report on April 17, 2017. It estimates that US crude oil production will rise in the seven shale regions by 124,000 bpd (barrels per day) to 5,193,000 bpd in May 2017—compared to the previous month. It’s the biggest monthly increase in more than two years. During this period, production is expected to rise mainly in the Permian and Eagle Ford Shale regions. Technical advancement and improving productivity led to the rise in production in US shale regions.
Rising crude oil production from the US could pressure crude oil (BNO) (IEZ) (SCO) prices in 2017. Moves in crude oil prices impact oil producers such as Northern Oil & Gas (NOG), Chevron (CVX), ExxonMobil (XOM), and Triangle Petroleum (TPLM).
What’s in this series?
In this series, we’ll focus on the American Petroleum Institute’s crude oil inventories, OPEC’s crude oil production, Russia’s crude oil production, and Iran’s crude oil production.
In the next part of this series, let’s start with crude oil prices during early morning trade on April 18, 2017.