Weekly US crude oil output
The EIA released the weekly US crude oil production data on April 11, 2018. The EIA reported that US crude oil production rose by 65,000 bpd (barrels per day) to a record high of 10,525,000 bpd on March 30–April 6, 2018. The production also increased by 1,290,000 bpd or ~13.9% from a year ago.
WTI oil futures contracts rose 2% on April 11, 2018, despite the news of record US crude oil production. Prices rose due to geopolitical tensions in the Middle East. The United States Oil ETF (USO) and the ProShares Ultra Bloomberg Crude Oil ETF (UCO) increased ~1.5% and ~2.9%, respectively, on April 11, 2018. USO aims to follow the performance of WTI oil futures, while UCO targets to provide twice the daily return of an index of WTI oil futures.
US crude oil production recovery
US crude oil production reached 8,428,000 bpd on July 1, 2016—the lowest level in more than two years. US crude oil production has increased by 2,097,000 bpd or ~25% since July 1, 2016.
Higher oil prices partly contributed to higher US oil production. US oil prices have risen ~155% since February 11, 2016. The Vanguard Energy ETF (VDE) and the Guggenheim S&P Equal Weight Energy ETF (RYE) have risen ~38.8% and ~50.8%, respectively, since February 11, 2016. RYE aims to track the performance of the S&P 500 Equal Weight Energy Index. VDE aims to track the performance an index of energy stocks.
Estimates for 2018 and 2019
The EIA released the STEO report on April 10, 2018. The report estimates that US oil production could average 10.69 MMbpd (million barrels per day) in 2018, which is 0.1% lower than the March estimates. US oil production could average 11.44 MMbpd in 2019, which is 1.5% higher than the March estimates. The production could reach the highest annual average in 2018 and 2019.
The International Energy Agency expects that the US could become the world’s top crude oil producer by 2023.
Production cuts and US oil output
The US crude oil output is expected to increase ~20% or by ~1,800,000 bpd from January 2017 to December 2018. If the production increases at this pace, it could offset ~100% of the ongoing supply cuts by major oil producers.
Record US oil production could be the biggest threat to oil prices in 2018 and 2019.
Next, we’ll discuss US gasoline inventories.