Monthly US crude oil production  

The EIA (U.S. Energy Information Administration) estimates that monthly US crude oil production rose by 62,000 bpd (barrels per day), or 0.7%, to 9.1 MMbpd (million barrels per day) in March 2017—compared to February 2017. Production rose 0.8% from the same period in 2016. Production has risen ~5.4% from the lows in April 2014. The rise in US crude oil production could pressure crude oil (XLE) (XOP) (USO) prices. So far, US crude oil prices have fallen 19.6% in 2017 due to the rise in US production. Lower oil prices have a negative impact on oil producers. Oil producers such as Hess (HES), Denbury Resources (DNR), and Bonanza Creek Energy (BCEI) have fallen 30.2%, 62.7%, and 9%, respectively, year-to-date.

Decoding Weekly and Monthly US Crude Oil Production

Weekly US crude oil production 

The EIA reported that US crude oil production fell by 24,000 bpd to 9,318,000 bpd between May 26, 2017, and June 2, 2017. Production is near the highest level since August 14, 2015. US production rose 11.1% from the low in July 2016.

US crude oil production estimates 

The EIA estimates that US crude oil production will average 9,330,000 bpd in 2017. It also estimates that US crude oil production will average 10,010,000 bpd in 2018. US production will likely hit an all-time high in 2018. Production averaged 8,880,000 bpd in 2016. Technology advancements and optimization in production costs will support the rise in oil production in 2017 and 2018.

President Trump’s energy plans could also boost US drilling activity. Higher production from the US, Brazil, Canada, Libya, and Nigeria in 2017 could range between ~1.2 MMbpd and ~1.5 MMbpd. US crude oil would be the biggest bearish catalyst for oil prices in 2017.

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

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