Preliminary estimates from two separate Energy Information Administration (EIA) reports suggest that February US oil production was either 13,350 thousand barrels per day (Bpd) or 13,500 thousand Bpd, marking a recovery from January’s challenging weather conditions. Indeed, the weekly estimates published by the EIA can be used to help forecast the results of the monthly aggregates which are released with a substantial lag. For example, the final figure for February will be released this Wednesday in the EIA’s Petroleum Supply Monthly print, while weekly estimates for March and April are already available.
A combination trade I like going into the print includes the “Yes” answer to the IBKR forecast contract question asking if the final result will exceed 13,300 thousand Bpd, which is priced at $0.62. The median estimate is at 13,400 thousand and the EIA is expecting 2025 to average 13,500 thousand throughout the year. Furthermore, January was the first month in four in which production dropped below 13,300 thousand and it was due to severe cold weather, which negatively affected extraction activities across the country. Volumes are expected to have recovered in February since the month didn’t feature substantial disruptions. Meanwhile, last December marked the all-time high at 13,451 thousand Bpd and in consideration of the tall hurdle, I like the “No” answer at 13,600 thousand Bpd, which costs $0.86. The combination trade consisting of the “Yes” at 13,300 thousand and the “No” at 13,600 thousand costs a total of $1.48 and pays out $2.00 on a figure in between both thresholds.
Another trade I like is related to natural gas production and is released in the same Wednesday report is the “Yes” answer concerning whether US dry natural gas production exceeded 3 billion cubic feet in February. Now in this data series the number is reported as a monthly aggregate which is critical considering that there were 28 days in February relative to the 31 days in January. But I’m still expecting February’s figure to arrive ahead of 3 billion cubic feet because January’s 3.23 billion was achieved alongside significant weather disruptions that weren’t present in February. The “Yes” for a figure above 3 billion costs just $0.55. Finally, volumes have come in above 3 billion for 23 consecutive months.
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Note: Prices are highest bids as of the morning of April 28, 2025.
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Try 13.5 million barrels per day!