Weekly US crude oil production
US crude oil production decreased by 1,000 bpd (barrels per day) to 10,270,000 bpd on February 9–16, 2018. However, production increased by 1,269,000 bpd or 14.1% YoY (year-over-year).
US crude oil prices have declined 5.1% since January 26, 2018. Prices declined partly due to near record US oil production. The PowerShares DB Oil Fund (DBO) and the VelocityShares 3x Long Crude Oil ETN (UWT) track crude oil futures. DBO and UWT have declined 4.6% and 15%, respectively, since January 26, 2018.
US crude oil production highs and lows
US crude oil production hit a record high of 10,271,000 bpd for the week ending February 9, 2018. However, production hit 8,428,000 bpd on July 1, 2016, which was the lowest level in more than two years. US crude oil production has increased by 1,842,000 bpd or 21.8% since July 1, 2016.
Higher oil prices and improved drilling costs led to the increase in US oil production. US crude oil prices have risen 140% since February 11, 2016. The Vanguard Energy ETF (VDE) and the Guggenheim S&P Equal Weight Energy ETF (RYE) have risen 31.1% and 41.5%, respectively, since February 11, 2016. These ETFs have exposure to upstream energy companies.
Estimates for 2018
US oil production could average 10.59 MMbpd (million barrels per day) in 2018 and 11.18 MMbpd in 2019, according to the EIA. US oil production could hit the highest annual average this year and next year.
US crude oil output is expected to average 10.4 MMbpd in 2018, according to the IEA.
Supply cuts and US oil production
US oil production is expected to increase 18.4% or by 1,649,000 bpd between January 2017 and December 2018. If US production increases at this speed, it could offset ~90% of the supply cuts by major oil producers.
Non-OPEC crude oil output is expected to increase by 1,400,000 bpd in 2018, which could pressure oil prices. The rise in the US and non-OPEC oil output could offset ~100% of the supply cuts by major oil producers, which could also pressure oil prices in 2018.
Next, we’ll discuss US gasoline inventories.