US crude oil production
The EIA (U.S. Energy Information Administration) released its “This Week in Petroleum” report on April 20, 2016. The government agency reported that crude oil production fell marginally by 24,000 bpd (barrels per day) to 9.0 MMbpd (million barrels per day) for the week ending April 15 compared to the previous week. US crude oil production fell for the 12th consecutive week. This production level is 5% less than in the corresponding period last year.
US crude oil production: highs and lows
Monthly US crude oil production peaked at 9.7 MMbpd in April 2015. In contrast, US crude oil production tested the low it set on October 17, 2014, during the week ending April 15, 2016. Weekly US crude oil production has fallen by 7.5% from the peak level of 9.7 MMbpd. US crude oil production has fallen sharply in the lower 48 states due to lower oil prices, and crude oil prices have fallen due to oversupply.
Lower crude oil prices affect US shale oil producers like Laredo Petroleum (LPI), Ultra Petroleum (UPL), and Whiting Petroleum (WLL) because they have higher break-even costs and production costs compared to oil producers in the Middle East and Russia. For more information on US energy companies’ financial woes, read North American Oil and Gas Producers’ Debt Rose in 2015 and Crude Oil’s Total Cost of Production Impacts Major Oil Producers.
US crude oil imports and refinery demand
Weekly US crude oil imports rose by 247,000 bpd to 8.2 MMbpd for the week ending April 15, 2016, compared with the previous week. The rise in imports adds to the crude oil inventory. For more about the US crude oil inventory, read the previous part of this series. For more on crude oil prices, read the first part of this series. Meanwhile, the US crude oil refinery demand rose by 163,000 bpd to 16.1 MMbpd for the same period. Crude oil refinery demand is 1.2% less than in the same period in 2015.
US crude oil production estimates and impact
The EIA forecasts that the US crude oil production could fall by 0.83 MMbpd to 8.6 MMbpd in 2016 compared to 2015. The expectation of slowing US crude oil production could support crude oil prices and oil producers like Denbury Resources (DNR) and Synergy Resources (SYRG).
The roller-coaster ride in crude oil prices influences ETFs and ETNs like the PowerShares DWA Energy Momentum Portfolio (PXI), the iShares U.S. Energy ETF (IYE), the iShares U.S. Oil Equipment & Services ETF (IEZ), and the United States 12 Month Oil Fund (USL).
In the next part of this series, we’ll cover gasoline prices.