Monthly US crude oil production
The EIA (U.S. Energy Information Administration) reported that monthly US crude oil production fell by 193,000 bpd (barrels per day) to 8,704,000 bpd in June 2016—compared to the previous month. Production fell by 2.2% month-over-month and 6.4% year-over-year. Read Will Slowing US Crude Oil Production Impact Crude Oil Prices? for more on the weekly US crude oil production. Slowing US crude oil production supports crude oil prices. For more on crude oil prices, read Part 1 of the series.
- East Coast (or PADD1) – Production was at 45,000 bpd in June 2016—compared to 47,000 bpd in May 2016.
- Midwest (or PADD 2) – Production was at 1,673,000 bpd in June 2016—compared to 1,696,000 bpd in May 2016.
- Gulf Coast (or PADD 3) – Production was at 5,357,000 bpd in June 2016—compared to 5,459,000 bpd in May 2016.
- Rocky Mountain (or PADD 4) – Production was at 643,000 bpd in June 2016—compared to 653,000 bpd in May 2016.
- West Coast (or PADD 5) – Production was at 983,000 bpd in June 2016—compared to 1,040,000 bpd in May 2016.
Peak and lows
US crude oil production peaked at 9.6 million barrels per day in April 2015. In June 2016, it hit the lowest monthly crude oil production since August 2014. Lower crude oil prices, higher break-even costs, and higher production costs for US oil producers—compared to Middle Eastern and Russian oil producers—led to the decline in US crude oil production.
The fall in US crude oil production impacts the revenues. In turn, it impacts oil producers and drillers’ earnings like Goodrich Petroleum (GDP), Stone Energy (SGY), WPX Energy (WPX), and Laredo Petroleum (LPI).
For more information on US energy companies’ financial challenges, read North American Oil and Gas Producers’ Debt Rose in 2015 and Crude Oil’s Total Cost of Production Impacts Major Oil Producers.
Impact on ETFs
The rollercoaster ride in crude oil prices also impacts funds such as the Vanguard Energy ETF (VDE), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), the Direxion Daily Energy Bear 3x (ERY), and the Guggenheim S&P 500 Equal Weight Energy ETF (RYE).
In the next part of the series, we’ll look at some crude oil price forecasts.