US crude oil production falls
On May 11, 2016, the EIA (U.S. Energy Information Administration) released its weekly petroleum report. The data showed that US crude oil production fell by 23,000 bpd (barrels per day) to 8.8 MMbpd (million barrels per day) between April 29–May 6, 2016. This is 6% less than in the same period in 2015. US crude oil production fell for the 15th consecutive week.
In the US, crude oil production fell by 80,000 bpd to 8.3 MMbpd for the week ended May 6, 2016, compared to the previous week in the Lower 48. In contrast, crude oil production in Alaska rose by 57,000 bpd to 0.48 MMbpd during the same period.
US crude oil production’s peaks and valleys
Monthly US crude oil production peaked at 9.7 MMbpd in April 2015—the highest level since the 1970s. US crude oil production hit its lowest level since September 5, 2014, for the week ended May 6, 2016. US crude oil output has fallen by 9.3% from its peak level of 9.7 MMbpd. US oil producers experienced higher break-even costs and higher production costs compared to oil producers in the Middle East and Russia, which led to the decline in US crude oil production.
For more information on US energy companies’ financial challenges, please 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
US crude oil imports fell by 5,000 bpd to ~7.7 MMbpd for the week ended May 6, 2016, compared to the previous week. This was ~12.5% more than in the same period in 2015.
US crude oil refinery inputs rose by 193,000 bpd to 16.2 MMbpd for the week ended May 6, 2016, compared to the previous week. Nationwide crude oil inventories fell despite steady crude oil imports and higher US refinery demand.
This type of data mismatch is common in the weekly data sets. However, this is typically smoothed out in the monthly data sets. Monthly data sets by the EIA are considered to be more accurate.
US crude oil production estimates and impact
The EIA released its May STEO (Short-Term Energy Outlook) report on May 10, 2016. It forecasted that US crude oil output could fall by 0.83 MMbpd to 8.6 MMbpd in 2016 compared to 2015. Then, it would fall again to 8.2 MMbpd in 2017. These forecasts are the same as April’s STEO report. The expectation of slowing US crude oil production could benefit crude oil prices.
In the next part of this series, we’ll cover gasoline prices.