US crude oil production
On January 21, 2016, the EIA[1. U.S. Energy Information Administration] reported that the US weekly crude oil production rose by 8,000 bpd (barrels per day) to a little less than 9.24 MMbpd (million barrels per day) for the week ending January 15, 2016, compared with the previous week. The four-week average crude oil production also rose by 14,000 bpd to 9.22 MMbpd. The monthly US crude oil production peaked at 9.6 MMbpd in 2015.
US crude oil production in 2014 and 2015
The current weekly US crude oil production is 0.53% more than the level seen last year. The four-week average crude oil production is also 0.7% more than 2014 levels. The US crude oil production rose due to technological advancement, higher crude oil prices between 2010–2014, and cheaper credit facilities in 2015. However, US crude oil production has fallen by 4% from the peak levels due to lower crude oil prices.
US crude oil production estimates
The EIA, in its monthly Short-Term Energy Outlook report, mentioned that US crude oil production averaged 9.4 MMbpd in 2015. US crude oil production could fall to 8.7 MMbpd in 2016 and 8.5 MMbpd in 2017 due to lower crude oil prices, as well as higher break-even costs and production costs. For more on the financial woes of US energy companies, read US Oil and Gas Companies’ Debt Exceeds $200 Billion. You can also go through how the total cost of producing crude is influencing oil producers.
The high-cost shale oil producers like Whiting Petroleum (WLL), Hess (HES), EOG Resources (EOG), and Continental (CLR) are feeling the heat due to record low oil prices. Oil companies like Energy XXI (EXXI), Halcón Resources (HK), and Goodrich Petroleum (GDP) are on the verge of bankruptcy due to historic low oil prices.
But, interestingly, US crude oil production is holding above 9 MMbpd. It could continue to hold above these levels in 2016 by strategic planning, cost cutting, optimizing resources, and idling high-cost rigs. We could also see oil prices trade lower for the next two decades. The rise in US production also supports the rise in the US crude oil inventory that we covered in the second part of this series. The next part of the series is about the latest updates on US crude oil imports.
The roller coaster ride in the oil and gas market affects ETFs like the United States Oil Fund (USO), the iShares US Oil Equipment & Services ETF (IEZ), the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the Vanguard Energy ETF (VDE), and the First Trust Energy AlphaDEX Fund (FXN).