Over the past couple of days now, oil prices have plummeted. In part, this has been driven by fears that OPEC may elect to not extend their oil production cut beyond the six-month mark (they will, in my opinion) but another large factor has been that a risk has been reintroduced to the markets: rising output from the US. In what follows, I will go over some data to put the oil production increases from the US in perspective and give my thoughts on what it all likely means for the global oil picture moving forward, as well as what it should mean for investors in companies like Whiting Petroleum (WLL), Chesapeake Energy Corp. (CHK), Approach Resources (AREX), and Legacy Reserves (LGCY), as well as for the United States Oil ETF (USO) and other oil-related ETFs moving forward.
A look at the US
Last year, oil production fell a nice clip compared to the year before, driven by a drop in oil prices in 2014 that worsened in 2015 and held firm through a sizable portion of 2016. The end result was a series of bankruptcies in the space and a downturn in investment that crushed a number of OPEC nations, harmed Russia and other non-OPEC nations, and pushed shale down considerably. At one point, if you use the EIA's weekly numbers, production fell to as little as 8.428 million barrels per day, while using their monthly estimates, the number dropped to around 8.567 million barrels per day. Since then, however, output has risen and recently topped 9 million barrels per day and is at, as of the time of this writing, 9.088 million barrels per day. Certainly, for oil bulls, this looks scary.
Just the other day, the EIA (Energy Information Administration) released some data in its Short-Term Energy
