Monthly US crude oil production
According to the EIA, US crude oil production increased 0.1% to 9.96 MMbpd (million barrels per day) in January 2018—compared to the previous month. Production increased by 1,139,000 bpd or 13% from a year ago.
WTI oil prices have declined ~5% since January 26, 2018. Prices declined partially due to near-record US oil production. The United States Oil ETF (USO) and the ProShares Ultra Bloomberg Crude Oil ETF (UCO) have declined ~3.8% and ~8.1%, respectively, since January 26, 2018. USO follows WTI oil futures, while UCO aims to provide twice the daily return of an index of WTI crude oil futures.
Crude oil production increased
Monthly US crude oil production reached a record high of ~10.1 MMbpd in November 2017. In contrast, production reached 8.5 MMbpd in September 2016—the lowest level in more than two years.
US crude oil production has increased by ~1.4 MMbpd or ~16.5% since September 2016. Technological advancements, higher oil prices, and improved drilling costs led to the rise in US oil production. WTI oil prices have increased ~140.4% since February 11, 2016. The iShares Global Energy ETF (IXC) and the Guggenheim S&P Equal Weight Energy ETF (RYE) have risen ~39% since February 11, 2016. RYE follows the S&P 500 Equal Weight Energy Index. IXC follows an index of global equities in the energy sector.
Estimates for 2018 and 2019
US oil production could average ~10.7 MMbpd in 2018 and 11.27 MMbpd in 2019, according to the EIA. Production could hit the highest annual average in 2018 and 2019.
Production cuts and US oil output
US oil production is estimated to rise ~20% or by ~1,800,000 bpd from January 2017 to December 2018. If US production rises at this speed, it could offset ~100% of the ongoing output cuts by major oil producers.
Record US oil production could weigh on oil prices in 2018.
Next, we’ll discuss US crude oil exports.