Analyzing US Crude Oil Output

Weekly US crude oil output 

The U.S. Energy Information Administration released its weekly petroleum status on June 21, 2017. It reported that US crude oil output rose by 20,000 bpd (barrels per day) or 0.21% to 9,330,000 bpd on June 9–16, 2017.

US crude oil output has risen 7.8% year-over-year. It has also risen ~11% from the low in July 2016. The rise in US crude oil output pressured crude oil (IEZ) (XES) (BNO) prices. August WTI crude oil futures have fallen ~20% in the last 12 months.

Analyzing US Crude Oil Output

Lower crude oil prices have a negative impact on oil and gas producers’ profitability like SM Energy (SM), Sanchez Energy (SN), and Stone Energy (SGY).

Breakeven and production costs 

US crude oil production is the biggest bearish catalyst for oil bulls in 2017. Lower drilling costs due improved technology support US shale oil producers. Rystad Energy estimates that US shale oil producers can break even between $50 and $60 per barrel as of June 2017. Some US shale oil producers can have a breakeven cost as low as $40 per barrel. The lower production cost from US shale oil producers compared to late 2015 would also support production. It suggests that US production could rise despite lower prices. 

Impact of a rise in US crude oil production 

The rise in crude oil production from the US, Brazil, Canada, Libya, and Nigeria in 2017 could pressure oil prices. It might even offset the production cut deal. For more US crude oil production estimates, read EIA, IEA, and OPEC Expect US Crude Oil Production to Rise.

In the next part of this series, we’ll look at US gasoline inventories.