US crude oil production
The EIA (U.S. Energy Information Administration) reported that US crude oil production rose by 9,000 bpd (barrels per day) to 8,699,000 bpd from November 18–25, 2016. US crude oil production rose for the second consecutive week.
Production rose 0.1% week-over-week, but fell 5.4% year-over-year. The rise in US crude oil production will pressure crude oil prices. For more on crude oil prices, read Part 1 of this series.
Lower crude oil prices could have a negative impact on oil and gas producers’ earnings like Devon Energy (DVN), Stone Energy (SGY), QEP Resources (QEP), and Apache (APA).
US crude oil production in the lower 48 states and Alaska
US crude oil production fell by 2,000 bpd to 8,177,000 bpd in the lower 48 states from November 18–25, 2016. However, production rose by 11,000 bpd to 522,000 bpd during the same period in Alaska. The increase in crude oil production in Alaska led to an overall increase in US crude oil production.
The recovery in crude oil prices since early 2016 led to the rise in US drilling activity and US crude oil production. Read Rig Count Could 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 Devon Energy (DVN), Stone Energy (SGY), QEP Resources (QEP), and Apache (APA).
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.
Moves in crude oil prices also impact funds such as the Direxion Daily Energy Bull 3x Shares ETF (ERX), the United States Oil ETF (USO), the United States Brent Oil (BNO), the ProShares Ultra Bloomberg Crude Oil ETF (UCO), the ProShares UltraShort Bloomberg Crude Oil (SCO), the iShares U.S. Oil Equipment & Services ETF (IEZ), the iShares U.S. Energy ETF (IYE), 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.