Weekly US crude oil output
The EIA released the weekly US crude oil output data on April 18, 2018. The EIA reported that the US crude oil output rose by 15,000 bpd (barrels per day) to a record high of 10,540,000 bpd on April 6–13, 2018. The production also rose by 1,288,000 bpd or ~14% YoY (year-over-year).
WTI oil futures contracts rose 2.9% on April 18, 2018, despite the news of record US crude oil output. Prices rose due to the decline in US crude oil inventories and geopolitical tension. The United States Oil ETF (USO) and the ProShares Ultra Bloomberg Crude Oil ETF (UCO) increased ~3.5% and ~6.8%, respectively, on April 18, 2018. USO aims to track the performance of WTI oil futures, while UCO targets to provide twice the daily return of an index of US oil futures.
US crude oil production recovery
The US crude oil output hit 8,428,000 bpd on July 1, 2016—the lowest level in more than two years. The US crude oil output has increased by 2,112,000 bpd or ~25.1% since July 1, 2016.
Higher oil prices, technological advancements, and improved drilling costs led to increased US oil production. US oil prices have risen ~161% since February 11, 2016. The Vanguard Energy ETF (VDE) and the Guggenheim S&P Equal Weight Energy ETF (RYE) have risen ~45% and ~58%, respectively, since February 11, 2016. RYE aims to follow the performance of the S&P 500 Equal Weight Energy Index. VDE aims to follow the performance an index of energy stocks.
Estimates for 2018 and 2019
The EIA estimates that US oil production could average 10.69 MMbpd (million barrels per day) in 2018 and 11.44 MMbpd in 2019. US oil production could reach the highest annual average in 2018 and 2019.
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 speed, it could offset ~100% of the ongoing production cuts by major oil producers.
Record US crude oil output could be the biggest bearish driver for oil prices in 2018 and 2019.
Next, we’ll discuss US gasoline inventories.