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Monthly US Crude Oil Production Rose Again

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Monthly US production

The EIA (U.S. Energy Information Administration) reported that monthly US crude oil production rose by 105,000 bpd (barrels per day) to 8.9 MMbpd (million barrels per day) in November 2016—compared to the previous month. Production rose 1.2% month-over-month, but fell 4.3% year-over-year. US crude oil production rose for the second straight month. The rise in US crude oil production could pressure crude oil (USO) (UCO) (USL) (IXC) (ERY) prices. For more on crude oil prices, read Part 1 of the series.

Read US Crude Oil Production Could Drive Crude Oil Prices in 2017 for more on weekly US crude oil production.

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Peaks and lows

US crude oil production peaked at 9.6 MMbpd in April 2015. In September 2016, production hit 8.6 MMbpd—the lowest monthly level since March 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.

The fall in US crude oil production impacts oil producers’ earnings like Marathon Oil (MRO), Comstock Resources (CRK), Warren Resources (WRES), and QEP Resources (QEP).

US production estimates for 2017 and Trump 

The EIA estimates that US crude oil production will rise by 110,000 bpd to 9,000,000 bpd in 2017—compared to 2016. US crude oil production averaged 8,890,000 bpd in 2016 and 9,420,000 bpd in 2015.

The successful implementation of President Trump’s proposed energy policies could lead to an increase in US drilling activity. It could increase US crude oil production. 

US crude oil production and OPEC’s meeting 

Crude oil prices are trading near 18-month highs due to major oil producers’ production cut, which would curb oversupply in the market. The US didn’t participate in the meeting. So, higher crude oil (VDE) (IEZ) (RYE) (XES) prices will also support US crude oil production in 2017. The rise in US crude oil production will pressure crude oil prices in 2017.

For more on crude oil prices, read OPEC, Russia, and the US Will Impact Crude Oil in 2017What Can Investors Expect in the Crude Oil Market in 2017, and US Election: How Will It Impact the Stock and Energy Markets.

Read Will Crude Oil Prices Test 3 Digits Again and Why Major Banks Upgraded Crude Oil Price Forecasts for more on crude oil price forecasts.

For more industry analysis, visit Market Realist’s Energy and Power page.

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