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Crude Oil Price Forecasts: Downgraded for the Fifth Month

PART:
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Part 2
Crude Oil Price Forecasts: Downgraded for the Fifth Month PART 2 OF 6

US Crude Oil Production Hit a 21-Month High

Crude oil futures

November West Texas Intermediate crude oil (USO) (DWT) futures contracts fell 0.32% and were trading at $50.42 per barrel in electronic trading at 2:15 AM EST on October 3, 2017. The E-Mini S&P 500 (SPY) December futures contracts rose 0.1% to 2,528.25 in electronic trading at 2:15 AM EST on October 3, 2017.

US crude oil (UCO) prices are near a four-month high. Higher crude oil prices are positive for oil and gas producers (XLE) (XOP) like Bill Barrett (BBG), PDC Energy (PDCE), and Cobalt International Energy (CIE).

US Crude Oil Production Hit a 21-Month High

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Monthly US crude oil production 

The EIA (U.S. Energy Information Administration) estimates that US crude oil production rose by 141,000 bpd (barrels per day) or 1.5% to 9.23 MMbpd (million barrels per day) in July 2017—compared to June 2017. Production rose by 560,000 bpd or 6.4% from the same period in 2016. US crude oil production is at the highest level since November 2015.

US crude oil (DBO) (SCO) prices have fallen 12% year-to-date. One of the reasons for the fall is the rise in US crude oil production in 2017. Production has risen 8% or by 689,000 bpd since the lows in September 2016.

Weekly US crude oil production

US crude oil production rose by 37,000 bpd to ~9.5 MMbpd on September 15–22, 2017. Production has risen by ~1.05 MMbpd or ~12.4% year-over-year.

US crude oil production estimates 

The EIA estimates that US crude oil production could average 9.3 MMbpd in 2017 and 9.8 MMbpd in 2018. US crude oil production could hit a new annual record in 2018.

Impact

The rise in US crude oil production could offset some of the impact of major producers’ production cut deal. It could pressure crude oil (UWT) (BNO) prices and energy producers’ (VDE) (IXC) (IYE) profitability.

In the next part, we’ll look at how Libya’s crude oil production drives oil prices.

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