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Will US Crude Oil Production and Exports Pressure Oil Prices?

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US crude oil production  

The EIA (U.S. Energy Information Administration) published its STEO (Short-Term Energy Outlook) report on November 7, 2017. It estimates that US crude oil production averaged 9.3 MMbpd (million barrels per day) in October 2017—down by 90,000 bpd (barrels per day) from the level in September 2017. Crude oil production fell due to Hurricane Nate, but recovered by the end of October 2017.

Weekly US crude oil production rose by 46,000 bpd to 9,553,000 bpd on October 20–27, 2017. Production rose by 1,031,000 bpd or 12.1% year-over-year. Any rise in US crude oil production is bearish for crude oil (UCO) (USL) (DBO) prices. Lower oil prices impact oil energy producers’ (IEZ) (FENY) earnings like ConocoPhillips (COP), Whiting Petroleum (WLL), Stone Energy (SGY), and Energen (EGN).

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EIA’s estimates for US crude oil production 

The EIA estimates US crude oil production will likely average 9,230,000 bpd in 2017—0.1% lower than the estimates from the October STEO report. The EIA also estimates that US crude oil production will average 9,950,000 bpd in 2018—0.2% higher than the previous estimates. US crude oil production could hit the highest annual average production in 2018 and exceed the previous record of 9,600,000 bpd hit in 1970. Production averaged 9,410,000 bpd in 2016 and 8,860,000 bpd in 2015.

US crude oil exports hit record 

US crude oil exports rose by 209,000 bpd to 2,133,000 bpd on October 20–27, 2017. US crude oil exports rose 11% week-over-week and by 1,729,000 bpd or 427% year-over-year. Record US crude oil exports are bearish for crude oil (BNO) (USO) (UWT) prices. Exports have increased due to the rise in domestic production, lifting of the crude oil export ban, and a wider spread between Brent and WTI oil prices.

Impact 

Record US crude oil production and record US crude oil exports could add to the global supplies. It might impact some of the benefits of the ongoing production cuts. As a result, it could pressure oil prices.

Read Will OPEC Drive the US Natural Gas Market in 2018? and Global Crude Oil Glut: Is It Shrinking? for the latest updates on crude oil and natural gas.

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