Crude Oil Production Up, Imports Down in June 19 Week: What Next?
June 24 Report: Higher Demand, Lower Imports Pull Crude Oil Lower
Crude oil production
The EIA (U.S. Energy Information Administration) estimates crude oil production increased by 15,000 barrels per day (or bpd) to ~9.60 million barrels per day (or MMbpd) in the week ended June 19. Last week’s production levels were ~14% higher than year-ago levels of ~8.45 MMbpd.
The four-week average production of 9.59 MMbpd last week was ~14% higher than the same period last year when it was 8.44 MMbpd. The four-week average increased ~0.1% week-over-week.
What it means
Higher production data are bearish for crude oil prices and oil producers such as Hess Corporation (HES), ConocoPhillips (COP), Murphy Oil (MUR), and Oasis Petroleum (OAS). All these companies are components of the iShares U.S. Energy ETF (IYE) and make up ~6.2% of the fund. Lower prices also don’t bode well for MLPs such as Targa Resources Partners (NGLS).
Crude oil imports
Crude oil imports fell 302,000 bpd to average 6.76 MMbpd in the week ended June 19. A decline in imports from Saudi Arabia led this decrease. They dropped 647,000 bpd in the June 19 week. Imports from Canada, Colombia, and Venezuela also fell during the week. A decline in imports is bullish for crude oil prices.
Imports were 7.8% lower than last year’s levels during the same week. The four-week average of 6.95 MMbpd in the June 19 week was 3.5% lower than last year. However, it was ~0.2% higher than the June 12 week’s average.
Supply forecasts for 2015 and 2016
According to the EIA’s June STEO (Short-Term Energy Outlook) report released on June 9, US crude oil production is expected to decline from June this year through early 2016. After that, growth is expected to resume. According to the EIA, crude oil production will average 9.4 MMbpd in 2015 and 9.3 MMbpd in 2016.
The EIA also expects the share of total US liquid fuels consumption met by net imports to drop to 21% in 2016, the lowest level since 1969. The share of net imports fell to an estimated 26% in 2014, compared to 60% in 2005. The EIA forecasts average net imports of 6.54 MMbpd in 2015.
In the next part of this series, we’ll take a look at demand trends for last week.
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