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Is Weekly US Crude Oil Production Bullish or Bearish?

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US crude oil production 

The EIA (U.S. Energy Information Administration) reported that US crude oil production fell by 11,000 bpd (barrels per day) to 8,681,000 bpd from November 4–11, 2016.

Production fell 0.1% week-over-week and 5.5% year-over-year. The fall in US crude oil production will support crude oil prices. For more on crude oil prices, read Part 1 of this series.

Higher crude oil prices could have a positive impact on oil and gas producers’ earnings like Stone Energy (SGY), Devon Energy (DVN), ExxonMobil (XOM), and Northern Oil & Gas (NOG).

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US crude oil production in the lower 48 states and Alaska 

US crude oil production fell by 8,000 bpd to 8,167,000 bpd in the lower 48 states from November 4–11, 2016. The production also fell by 3,000 bpd to 514,000 bpd during the same period in Alaska. The decrease in crude oil production in the lower 48 states and Alaska led to an overall decrease in US crude oil production. Read Rig Count Will Impact US Crude Oil Production and Prices for more on US drilling activity. Read, Is US Crude Oil Production at a Turning Point? for more on monthly crude oil production.

Peaks and lows 

US crude oil production peaked at 9,600,000 bpd in June 2015. In contrast, it hit a low of 8,428,000 bpd for the week ending July 1, 2016—the lowest level since June 2014.

Lower crude oil prices, higher break-even costs, and higher production costs for US shale oil producers compared to other oil producers led to the fall in US crude oil production.

Lower crude oil prices could have a negative impact on oil producers’ earnings like Stone Energy (SGY), Devon Energy (DVN), ExxonMobil (XOM), and Northern Oil & Gas (NOG).

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.

Volatility in crude oil prices also impacts funds such as the Direxion Daily Energy Bull 3x Shares ETF (ERX), the United States Brent Oil (BNO), the ProShares UltraShort Bloomberg Crude Oil (SCO), the iShares Global Energy ETF (IXC), the iShares U.S. Oil Equipment & Services ETF (IEZ), the iShares U.S. Energy ETF (IYE), the ProShares Ultra Bloomberg Crude Oil ETF (UCO), the Fidelity MSCI Energy (FENY), and the PowerShares DWA Energy Momentum (PXI).

In the next part of this series, we’ll take a look at the US crude oil refinery input, crude oil imports, and crude oil production estimates.

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