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What Effect Will U.S. Oil Production Have on Your Money?

October 30, 2017
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It is no secret that the price of oil had been on the decline for the past few years, but it seems like that has finally changed. Bloomberg reports that oil has reach its highest point since 2015, pricing in at $60 a barrel.

Bloomberg explains that this is largely due to signs that OPEC will continue to cut supply, which in turn will drive the price of oil up.

This has had a somewhat unforeseen consequence; U.S. oil exports have skyrockets. Reuters reports that:

Tankers carrying record levels of crude are leaving in droves from Texas and Louisiana ports, and more growth in the fledgling U.S. oil export market may before long test the limits of infrastructure like pipelines, dock space and ship traffic…with total U.S. crude production currently at 9.5 million barrels a day and expected to add 800,000 to 1 million bpd annually, export capacity could be tested before long.

So what does this all mean for the market?

One consequence could be that with the U.S. pumping out more oil, it will mitigate the effects of OPEC’s production curb. However, it will be difficult to gauge the impact of American oil on the market because, as Reuters explains, federal agencies “do not track” the amount of oil capacity in the country. Never the less, the influx of new oil will have an affect on the price.

Read: Could Oil Stocks be Getting a New Leader with Aramco Set to Go Public in 2018?

Another consequence is that with the strain being put on U.S. infrastructure, exports could begin to lag. This would mean that for all the production that the major American oil companies are doing, the gains will not be for the long-term. As a result, oil investors should keep this news in mind when considering the price of oil stocks.

The oil market seems to be going through some serious changes, so investors should be on their toes in the coming years. Between OPEC, Aramco and the U.S. (just to name a few of the myriad of players) one of the world’s top commodities is about to be shaken up, so be sure to stay informed.

To watch Bloomberg’s segment on the rising price of oil, click here.

To read Reuters’ article on expanding American oil exports, click here.

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