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Is It the Beginning of the Bear Market for Crude Oil Prices?

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Part 3
Is It the Beginning of the Bear Market for Crude Oil Prices? PART 3 OF 5

US Crude Oil Production Hit July 2015 High

US crude oil production 

The EIA (U.S. Energy Information Administration) estimates that US crude oil production rose by 14,000 bpd (barrels per day) to 9.6 MMbpd (million barrels per day) on September 22–29, 2017. US crude oil production has risen by ~1.1 MMbpd, or ~13%, from the same period in 2016.

US crude oil production rose due to higher production from Alaska. However, crude oil production in the lower 48 states of the US was flat at ~9.1 MMbpd on September 22–29, 2017. The production in Alaska rose by 14,000 bpd to 497,000 bpd during the same period.

US Crude Oil Production Hit July 2015 High

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US crude oil production is at the highest level since July 2015. US crude oil (UCO) (UWT) prices have fallen 12.5% year-to-date due to high production. Moves in crude oil (DBO) (USO) impact oil and gas producers (IXC) (FENY) like Northern Oil & Gas (NOG), SM Energy (SM), and QEP Resources (QEP).

Production estimates  

US crude oil production is expected to average 9.3 MMbpd in 2017, according to the EIA. US production could rise by 500,000 bpd or 5.4% to 9.8 MMbpd in 2018.

Impact  

US crude oil production is the biggest bearish driver for crude oil (DWT) (SCO) prices. It could hit a new annual record in 2018. Improving cost and operational efficiency could support US crude oil production.

Record US crude oil production could offset some of the impact of major producers’ output cut deal. It could delay global oil market rebalancing and pressure crude oil (BNO) prices.

In the next part of this series, we’ll discuss US gasoline inventory updates for the week ending September 29, 2017.

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