EIA says U.S. oil production to drop 116,000 BOPD in January

[dan_s]

Production forecast says NatGas will be down by 365 MMcf/d in Jan

The Energy Information Administration (EIA) forecasts that next month. Despite the trend of more efficient wells, the EIA said it anticipates lower production in all major oil producing regions except the Permian and the Utica in January.

The most substantial drop in production is expected to come from the Eagle Ford, where the EIA believes production will fall by 77 MBOPD, making up 44% of the overall decline.

Overall production of natural gas is also expected to decline next month, with the EIA calling for 365 MMcf/d less in the first month of 2016. The majority of the decline will come from the Marcellus and the Eagle Ford, which are expected to lower production by 213 MMcf/d and 172 MMcf/d, respectively.

The lower natural gas production in those two plays alone makes up for 385 MMcf/d, but the forecast also calls for additional production from the Haynesville, Permian and Utica.

The EIA expects WTI to average $50.89 in 2016

The agency also released its monthly Short-Term Energy Outlook (STEO) this week, calling for WTI to average $50.89 per barrel next year. The EIA expects WTI to trade at a $4.89 discount to international crude oil benchmark Brent, which the agency believes will average $55.78 per barrel.

In the STEO, the EIA estimates that U.S. crude oil production will continue to decline through the third quarter of 2016. The agency expects crude oil production to average 8.8 MMBOPD in 2016, half a million barrels less per day than this year.

At the current rate of decline, U.S. oil production will be down near 8.0 million barrels of crude oil per day by December, 2016, from the peak of 9.6 million barrels per day in April, 2016.

[dan_s]

Capital budgets are being slashed for 2016 as more companies go to survival mode. These budget cuts will lead to an acceleration of the production decline.

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