EIA data collection is flawed
Posted: Mon Jul 10, 2017 6:13 pm
The EIA's weekly report on U.S. oil production, inventories, etc. is based on formulas. Think about it for a minute and you know that they do not have a gage on all of the million+ oil & gas wells in the U.S. They use sampling and trend analysis.
Actual production data is at least two months old. It comes from the individual state reports, which are very close to actual production, but they do change slightly as companies are allowed to file amended returns.
EIA just added U.S. crude oil production for April here: https://www.eia.gov/dnav/pet/hist/LeafH ... RFPUS1&f=M
The report shows that April production was 24,000 barrels per day LOWER than March production.
I went back and found that in their weekly reports, EIA had reported that U.S. production had increased by 94,000 barrels per day in April.
This is a BIG DEAL in a market where traders believe U.S. oil production is going straight up. Had the weekly reports in April been accurate, my guess is that oil prices would be higher today.
Here is the deal: EIA's weekly reports are based primarily on trends, so if production went up in March, they assume it will keep going up in April. This method will always miss a change in the trend.
--------------------------------
The point of all this is that I see more and more evidence that U.S. production growth is much smaller than people think it is. Yes, production in the Tier One areas of the Permian Basin, Eagle Ford and SCOOP/STACK will keep going up. However, outside of those areas production is on decline.
Actual production data is at least two months old. It comes from the individual state reports, which are very close to actual production, but they do change slightly as companies are allowed to file amended returns.
EIA just added U.S. crude oil production for April here: https://www.eia.gov/dnav/pet/hist/LeafH ... RFPUS1&f=M
The report shows that April production was 24,000 barrels per day LOWER than March production.
I went back and found that in their weekly reports, EIA had reported that U.S. production had increased by 94,000 barrels per day in April.
This is a BIG DEAL in a market where traders believe U.S. oil production is going straight up. Had the weekly reports in April been accurate, my guess is that oil prices would be higher today.
Here is the deal: EIA's weekly reports are based primarily on trends, so if production went up in March, they assume it will keep going up in April. This method will always miss a change in the trend.
--------------------------------
The point of all this is that I see more and more evidence that U.S. production growth is much smaller than people think it is. Yes, production in the Tier One areas of the Permian Basin, Eagle Ford and SCOOP/STACK will keep going up. However, outside of those areas production is on decline.