US crude oil production
The EIA (U.S. Energy Information Administration) released its weekly crude oil inventory report on October 18, 2017. It estimates that US crude oil production fell by 1,074,000 bpd (barrels per day) to 8,406,000 bpd on October 6–13, 2017. Production fell 11.3% week-over-week and by 58,000 bpd or 0.8% year-over-year. US crude oil production was at the lowest level since May 30, 2014.
Production fell due to Hurricane Nate. The fall in production partially supported crude oil (UCO) (DBO) prices on October 18, 2017. However, crude oil bulls didn’t celebrate, which was reflected in oil (DWT) (UWT) prices. US crude oil production is expected to recover quickly after the hurricane’s impact ends.
US crude oil (USO) (SCO) prices have fallen 8.4% year-to-date due to high US crude oil production. Changes in oil prices impact oil producers (IEZ) (RYE) like ConocoPhillips (COP), Energen (EGN), and Northern Oil & Gas (NOG).
EIA’s US crude oil production estimates
The EIA estimates that US crude oil production will average 9.24 MMbpd in 2017. Production will rise by 680,000 bpd or 7.4% to 9.92 MMbpd in 2018—compared to 2017.
Production averaged 9.4 MMbpd in 2015. It fell to 8.86 MMbpd in 2016 due to lower crude oil prices, higher production, and US shale producers’ breakeven costs compared to peers.
According to the EIA, US crude oil production is expected hit a fresh annual record in 2018. Record US crude oil production could have a negative impact on crude oil (BNO) (USO) prices. It could also offset some of the positive impact of OPEC’s output cut deal.
In the next part, we’ll discuss how US gasoline inventories impact crude oil prices.