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US Could Be the World’s Largest Crude Oil Producer by 2020

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Weekly US crude oil production  

The EIA (U.S. Energy Information Administration) estimates that the US crude oil output was steady at 10,900,000 bpd (barrels per day) on June 29–July 6. The output was steady at a record high level for the fourth consecutive week. The US crude oil output increased by 1,503,000 bpd or ~16% from a year ago.

The lack of pipeline takeaway capacity constraining the supply and trade tariffs could limit oil demand. Both of these factors could limit US crude oil prices and production activity.

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The EIA released its US crude oil output data on July 11. Active WTI crude oil prices fell 5% on July 11 due to the US-China trade war and steady US oil production. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) fell 2.63% on the same day. XOP seeks to follow the performance of the S&P Oil & Gas Exploration & Production Select Industry Index.

California Resources (CRC), Ultra Petroleum (UPL), WildHorse Resource Development (WRD), and SRC Energy (SRCI) fell 8.3%, 5.8%, 5.6%, and 5.1%, respectively, on July 11. These stocks were the top percentage losses in XOP’s portfolio during this period. These stocks account for 4.6% of XOP’s holdings.

US crude oil production recovery 

The US crude oil output hit 8,428,000 bpd for the week ended July 1, 2016. It was the lowest level in more than two years. Since then, the US oil output has increased by 2,472,000 bpd or 29.33%. Higher oil prices mainly led to the rise in the US oil output. WTI oil futures have risen 169% since February 11, 2016. 

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US crude oil production estimates  

The EIA released its monthly STEO report on July 10. The EIA estimates that the US crude oil production could average 10,790,000 bpd in 2018 and 11,800,000 bpd in 2019.

US crude oil production would average 12.02 million bpd during the fourth quarter of 2019, according to the EIA. If these projections are achieved, the US will be the largest oil producer in the world. 

Impact  

Record US crude oil output could pressure oil prices. Increased production from OPECRussia, and Saudi Arabia and trade wars could pressure oil prices. However, these bullish drivers could help oil prices.

Next, we’ll discuss US crude oil exports.

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