Weekly US crude oil production
The EIA (U.S. Energy Information Administration) released its weekly US crude oil output data on June 27. The EIA reported that the US crude oil output was steady at 10,900,000 bpd (barrels per day) on June 15–22. The production has been steady at a record high level for the second straight week. The US crude oil output increased by 1,650,000 bpd or ~17.8% from a year ago.
According to Reuters, a lack of pipeline capacity for exports could have been the reason for steady US crude oil production.
Active WTI crude oil prices rose on June 27 despite steady US crude oil production. We discussed oil’s bullish drivers in Part 1. August WTI crude oil futures rose 3.2% on June 27, while the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) rose 1.4%. XOP seeks to follow the performance of the S&P Oil & Gas Exploration & Production Select Industry Index.
RSP Permian (RSPP), HighPoint Resources (HPR), California Resources (CRC), and Concho Resources (CXO) rose 5.1%, 4.9%, 4.8%, and 4.6%, respectively, on June 27. These stocks were among the top percentage gainers in XOP’s portfolio during this period. These stocks account for 5.9% of XOP’s holdings.
US crude oil production recovery
The US crude oil output declined to 8,428,000 bpd for the week ending July 1, 2016—the lowest level in more than two years. Since then, the US crude oil output has increased by 2,472,000 bpd or 29.3%. Higher oil prices mainly led to the rise in the US crude oil output. WTI oil futures have risen 178% since February 11, 2016.
US crude oil production estimates
US crude oil production could average 10,790,000 bpd in 2018 and 11,760,000 bpd in 2019, according to the EIA. The production would hit the highest annual averages in 2018 and 2019 if the projections are achieved.
Record US crude oil production could pressure oil prices. OPEC is expected to increase its production starting in July. Saudi Arabia is expected to pump oil at record levels during the same period. All of these factors could pressure oil prices.
Next, we’ll discuss US crude oil exports.