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What Could Offset OPEC’s Crude Oil Production Cut Deal?

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US crude oil production 

The EIA (U.S. Energy Information Administration) reported that US crude oil production rose by 22,000 bpd (barrels per day) to 9,342,000 bpd on May 19–26, 2017. Production is near the highest level since August 14, 2015. US production rose 10.8% from the low in July 2016. The rise in US crude oil production pressured crude oil (UCO) (SCO) (IEZ) prices. As a result, prices have fallen 15.4% YTD (year-to-date). Read EIA Upgraded US Crude Oil Production Estimates for more on US production.

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Brazil and Canada’s crude oil production 

The IEA (International Energy Agency) estimates that Brazil’s crude oil production could hit 2.8 MMbpd in 2017—200,000 bpd higher than 2016. Canada’s crude oil production could hit 4.7 MMbpd in 2017—200,000 bpd higher than 2016.

Libya and Nigeria’s crude oil production 

A Reuters survey estimates that Libya’s crude oil production rose by 180,000 bpd (barrels per day) to 0.73 MMbpd (million barrels per day) in May 2017—compared to April 2017. It’s the highest level in the last three years.

A Reuters survey estimates that Nigeria’s crude oil production rose by 130,000 bpd to 1.63 MMbpd in May 2017—compared to April 2017. It’s near a 15-month high. Libya and Nigeria are OPEC members. Read Why Did OPEC’s Crude Oil Production Rise in May? for more on OPEC’s production.

The rise in production from the US, Brazil, Canada, Libya, and Nigeria in 2017 could range between ~1.2 MMbpd and ~1.5 MMbpd. It could offset the reduction in supply from OPEC’s production cut deal extension. It could weigh on crude oil (USL) (RYE) prices. Lower oil prices have a negative impact oil and gas exploration and production companies like QEP Resources (QEP), Northern Oil & Gas (NOG), and Triangle Petroleum (TPLM).

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

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