Do you see what I see ...

[dan_s]

U.S. oil output on brink of "dramatic" decline, executives say

"Oil industry execs speaking at the Oil and Money conference in London warn of a "dramatic" decline in U.S. production that could pave the way for a future spike in prices if fuel demand increases.Former EOG Resources (EOG +2.7%) CEO Mark Papa, now a partner at energy investment firm Riverstone Holdings, expects U.S. oil production to stall this month and begin to decline from early next year.Royal Dutch Shell (RDS.A, RDS.B) CEO Ben van Beurden agrees, saying U.S. oil producers will struggle to refinance while prices remain so low, leading to lower output in the future.Weatherford (WFT +9.9%) CEO Bernard Duroc-Danner notes that the speed and brutality of cost cutting in the industry is the deepest since 1999; in addition to WFT, he thinks just two other big North American oil services companies will remain as the sector is forced to consolidate."

Upstream companies are "putting on the brakes". The active rig count will continue to fall and even fewer wells will be completed until oil and gas prices increase. My SWAG is that U.S. oil production will drop 400,000 to 500,000 barrels per day from 9/30 to 12/31/2015. Even if WTI returns to the $60/bbl area, U.S. production will continue to fall in 2016. Within six months the U.S. refiners will be forced to import over 50% of the oil they need to meet rising demand for refined products.

Natural gas production is also on decline.

[dan_s]

A forecast from the U.S. Energy Information Administration sees U.S. shale production falling by the most on record in November, extending a nationwide output decline into a seventh month.

"Non-OPEC supply will probably decrease more steeply than previously anticipated," said Carsten Fritsch, analyst at Commerzbank in Frankfurt. "Shale oil production in the U.S., for example, is now falling sharply." < This is what happens when the number of rigs drilling for oil drops by 1,000. - Dan