Peak Oil Production in the U.S. has arrived - March 27

[dan_s]

Note received today from HFI Research:

For the last 18-20 months, it felt like we were just screaming into the void. Our real-time US crude oil production data started to peak in late 2023, and from then on, we've been hammering away the few key points that are starting to garner mainstream media attention:

1. US shale is getting gassier.

2. US crude oil production growth has plateaued.

2. All of the future growth will come from NGL and natural gas.

Although the investment community is finally starting to grapple with the reality (US crude oil production has stalled), most people do not fully realize just yet the extent of the underperformance. And the confusion for this is because EIA changed the way it reports US crude oil production back in 2023.

On Dec 20, 2023, we published a public piece titled "US Oil Production Is A Lot More Fluff Than Substance." In it, we described the methodology change from EIA.

To put it simply, EIA had understated US crude oil production at the end of 2022 and overstated crude oil production at the end of 2023 resulting in materially higher production growth than expected.

The methodology change tricked people into believing that US crude oil production growth was back to the heydays of US shale (2017-2019), when the reality was closer to a peak.

And for much of 2024, we repeatedly hammered the point that US shale crude oil production growth is peaking. We published a pivotal piece on Nov 8, 2024, titled "The Peak In US Oil Production Is Here And Why You Need To Own Energy Stocks."

Since then, we've seen:

Dallas Fed survey showing producers expressing concerns about low oil prices and the inability to grow.

Scott Sheffield saying publicly on CNBC that Pioneer was beginning to run out of tier 1 inventory.

Harold Hamm pointing to the peak in US crude oil production.

And from the intel we are gathering from individual producers in the Permian, our broader insight that associated gas production is outpacing crude oil production growth is starting to come to fruition.

It's safe to say that our thesis is finally going mainstream.

[dan_s]

Trading Economics:
WTI crude oil futures edged higher to settle at $69.90 per barrel on Thursday, building on about 1% gains from the previous day as traders assessed a tightening of crude supplies amid concerns over the impact of new US tariffs on the global economy.
> Market participants were focused on the risks associated with escalating trade tensions, particularly after US President Donald Trump unveiled plans to implement 25% tariffs on imported cars and light trucks, with auto parts tariffs set to take effect in May.
> Other supports came from US sanctions, which have heightened supply risks from key producers like Iran and Venezuela. India’s Reliance Industries, operator of the world’s largest refining complex, confirmed plans to halt Venezuelan oil imports following the US threat of 25% tariffs on its buyers.
> Additionally, data showing a significant drop in US crude inventories by 3.3 million barrels last week provided further support to the market.

Again, no mention of the increasing likelihood that Trump is going to get a lot more aggressive with Iran.