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US Crude Oil Production Remained Flat: What Does It Mean?

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US crude oil production 

The EIA (U.S. Energy Information Administration) reported that the weekly US crude oil production remained flat at 9.1 MMbpd (million barrels per day) for the week ending March 4, 2016. The US crude oil production has been almost flat at 9.1 MMbpd for the last five weeks. The US crude oil production fell by 3.26% from 9.4 MMbpd for the week ending March 6, 2015, compared to the US production for the week ending March 4, 2016. The US crude oil production has been falling due to higher break-even costs and production costs of US shale oil producers like Hess (HES), Ultra Petroleum (UPL), and Whiting Petroleum (WLL) compared oil producers in the Middle East and Russia. For more information on US energy companies’ financial woes, read US Oil and Gas Companies’ Debt Exceeds $200 Billion and Crude Oil’s Total Cost of Production Impacts Major Oil Producers.

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US crude oil import 

The EIA reported that weekly US crude oil imports fell by 244,000 bpd (barrels per day) to 8 MMbpd for the week ending March 4, 2016. This is 18% more than what it was in the same period in 2015. Higher imports add to crude oil stocks.

US crude oil refinery demand

The EIA reported that the weekly US crude refinery demand rose by 59,000 bpd to 15.9 MMbpd for the week ending March 4, 2016. The current weekly crude oil refinery demand is 4% more than the same period in 2015. The speculation of slowing refinery demand due to maintenance could have a negative impact on crude oil prices if US crude oil supplies remain steady.

Impact 

The EIA expects that the US crude oil production could average around 8.7 MMbpd and 8.2 MMbpd in 2016 and 2017, respectively. The expectation of slowing US crude oil production could benefit oil prices. The rise in oil prices will benefit oil and gas producers like Range Resources (RRC), Swift Energy (SFY), and Synergy Resources (SYRG). The ups and downs in oil and gas prices impact ETFs and ETNs like the iShares U.S. Energy ETF (IYE), the iShares U.S. Oil Equipment & Services ETF (IEZ), and the VelocityShares 3x Long Crude Oil ETN (UWTI).

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