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US Shale Oil Production Could Pressure Crude Oil Futures


Mar. 13 2018, Updated 11:50 a.m. ET

Crude oil futures 

April US crude oil futures contracts fell 1.1% to $61.36 per barrel on March 12, 2018. Brent oil futures fell 0.8% to $64.95 per barrel on March 12, 2018.

The United States Oil ETF (USO) and the United States Brent Oil ETF (BNO) follow US and Brent oil futures, respectively. USO fell ~0.8% to 12.3 on March 12, 2018, while BNO fell 0.8% to 17.8 on the same day.

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Crude oil and ETFs’ performance  

Crude oil futures fell on March 12, 2018, due to the expectation of a rise in US oil production. The expectation of a small build in Cushing crude oil inventories also pressured oil prices. Energy Analytics, a market intelligence company, expects a small build in Cushing inventories for the first time in 12 weeks.

US crude oil prices decreased ~2% on March 5–12, 2018. Prices fell due to increased US crude oil inventories and production. The ProShares Ultra Bloomberg Crude Oil ETF (UCO) decreased 3.1% on March 5–12, 2018. UCO aims to provide twice the daily return of an index of WTI crude futures contracts.

The PowerShares DB Oil Fund (DBO) was flat at 24.5 on March 5–12, 2018. DBO tracks the performance of the DBIQ Optimum Yield Crude Oil Index Excess Return. DBO outperformed other major crude oil ETFs during this period.

Crude oil price drivers 

On March 12, 2018, the EIA said that US shale oil production would rise in the seven major shale regions by 131,000 bpd (barrels per day) to 6,954,000 bpd in April 2018—compared to the previous month. Production is expected to rise mainly in the Permian and Eagle Ford Shale regions during this period.

The EIA will release weekly crude oil production data on March 14, 2018. A rise in US crude oil production could pressure oil prices in upcoming sessions.

Series overview  

In this series, we’ll discuss Venezuela, Saudi Arabia, and Iran’s crude oil production. We’ll also discuss some crude oil price forecasts.


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