8 Feb

Will President Trump Crash Crude Oil Prices?

WRITTEN BY Gordon Kristopher

President Trump and US crude oil production

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

Bank of America Merrill Lynch thinks that President Trump’s energy policies would increase supplies in the US. The supply would also increase in the global oil market, which would lead to oversupply in 2018. As a result, it would pressure crude oil (VDE) (IEZ) (RYE) (XES) prices in 2018.

Lower crude oil prices have a negative impact on oil producers such as Denbury Resources (DNR), Chevron (CVX), SM Energy (SM), and Bonanza Creek Energy (BCEI).

Will President Trump Crash Crude Oil Prices?

US production estimates 

The EIA (U.S. Energy Information Administration) released its monthly STEO (Short-Term Energy Outlook) report on February 7, 2017. The EIA estimates that US crude oil production will average 8,980,000 bpd (barrels per day) and 9,530,000 bpd in 2017 and 2018, respectively.

In its previous STEO report, the EIA estimated that US crude oil production will average 9,000,000 bpd and 9,300,000 bpd in 2017 and 2018, respectively. US crude oil production averaged 8,890,000 bpd in 2016 and 9,420,000 bpd in 2015.

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 oil producers’ meeting. Higher crude oil (FENY) (SCO) (PXI) prices will also support US crude oil production in 2017 and 2018. The rise in US crude oil production will pressure crude oil prices in 2017 and 2018.

Read What Can Investors Expect in the Crude Oil Market in 2017 and Could Donald Trump Be the Biggest Driver for Crude Oil Prices? for more on crude oil prices.

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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