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Will the US Crude Oil Output Rise in November?


Dec. 4 2020, Updated 10:52 a.m. ET

US crude oil output 

The EIA (U.S. Energy Information Administration) published that the US crude oil output rose by 48,000 bpd (barrels per day) to 9.2 MMbpd (million barrels per day) for the week ending October 30, 2015—compared to the previous week. The monthly average was at 9.13 MMbpd in October—compared to 9.12 MMbpd in September. The monthly US crude oil production peaked at 9.6 MMbpd in April 2015. In contrast, the US onshore production fell for the fifth consecutive month in August 2015. The US onshore crude oil output was at 7.3 MMbpd in August—excluding Alaska.

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Crude oil output consensus  

In its October monthly drilling report, the EIA estimated that US crude oil production could fall by 93,000 bpd in November compared to October. The next monthly drilling report is expected to release on November 9, 2015. The US production is falling due to the catastrophic fall in crude oil prices. Prices fell almost 60% since June 2014 due to oversupply concerns. Lower crude oil prices impact oil producers’ margins like Occidental Petroleum (OXY), Hess (HES), Chevron (CVX), and ExxonMobil (XOM).

The current US production is 2.1% more than the levels of 8,972 MMbpd in 2014. In its October STEO (Short-Term Energy Outlook) report, the EIA stated that the crude oil output could average around 9.3 MMbpd in 2015 and fall to 8.9 MMbpd in 2016. The consensus of slowing US production over the long term could benefit crude oil. However, the consensus and reality are totally different. If crude oil prices rally and are stable over $60 per barrel, we could see the US shale oil producers scale back on production. As a result, US production could hit a peak again. The uncertainty in the crude oil prices will impact ETFs like the iShares U.S. Oil & Gas Exploration & Production ETF (IEO) and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).

In the next part of this series, we’ll discuss the US crude oil rig count.


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