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Crude Oil Prices Fall as US Weekly Production Rises

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US crude oil output

The EIA (U.S. Energy Information Administration) reported that weekly US crude oil output rose by 15,000 bpd (barrels per day) for the week ending June 19, 2015. The crude oil output was at 9.60 MMbpd (million barrels per day) for the week ending June 19, 2015—compared to 9.589 MMbpd for the week ending June 12, 2015. In 2014, the US output was at 8.446 MMbpd. The current US output is 13.2% more than the crude oil production last year. The crude oil production is at record levels since the 1970s. Weekly US production rose for the fourth time in the past month.

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US crude oil production rose from the lower 48 states of the US for the week ending June 19, 2015. In contrast, the oil output fell from the Alaskan oil fields. Oil production from Alaska fell by 417,000 bpd for the week ending June 19, 2015—compared to the previous week. The production from the lower 48 states rose by 76,000 bpd to 9.18 for the period ending June 19, 2015. The EIA projects that crude oil production could average around 9.3 MMbpd in 2015.

Market surveys from Goldman Sachs suggest that crude oil production from the US could fall in 2H15. The fall in US production might support crude oil prices. In contrast, crude oil production might rise in early 2016. The massive production from the US, Russia, and the Middle East will continue to put pressure on crude oil prices. The slowing rigs are giving a mixed picture of the crude oil production market.

Despite uncertainty in the crude oil market, upstream players like Noble Energy (NBL), Occidental Petroleum (OXY), and Carrizo Oil & Gas (CRZO) have raised their 2015 oil production outlook. This also impacts the performance of ETFs like the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and the Select Sector SPDR Fund ETF (XLE).

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