EIA has been overstating U.S. oil production
Posted: Tue Aug 01, 2017 1:54 pm
The EIA's weekly reports on production, imports, inventory levels, etc. are just estimates, but most people take them as the gospel truth.
U.S. production is the biggest "WAG" each week since EIA has no way of knowing what actual production is. The upstream companies themselves don't know for sure.
Actual production is on a 60 day lag. It is based on state reports, which are much more accurate but they are often adjusted for months since the upstream companies can file amended reports with the states.
EIA just posted "actual" production for May and it is the 2nd month in a row that their weekly reports were more than 150,000 BOPD above actuals. < This is a BIG DEAL.
See for yourself: https://www.eia.gov/dnav/pet/hist/LeafH ... RFPUS1&f=M
Actual Production / Days in the month = Oil produced per day > Here is what EIA reported in the weekly reports for the last five month
2017:
Jan: 274,597,000 bbls / 31 days = 8,857,968 BOPD vs 8,941,500 BOPD per the EIA's weekly reports
Feb: 254,100,000 bbls / 28 days = 9,075,000 BOPD vs 8,997,000 BOPD per the EIA's weekly reports
Mar: 282,322,000 bbls / 31 days = 9,107,161 BOPD vs 9,134,400 BOPD per the EIA's weekly reports
Apr: 272,481,000 bbls / 30 days = 9,082,700 BOPD vs 9,291,250 BOPD per the EIA's weekly reports < WOW!
Mar: 284,230,000 bbls / 31 days = 9,168,710 BOPD vs 9,320,250 BOPD per the EIA's weekly reports < Double WOW!
So, for April and May, the EIA has over-reported U.S. oil production by 208,550 BOPD in April and 151,540 BOPD in May. What do you think oil prices would have done if EIA had reported a decline in U.S. production from March to April?
Phil Flynn saw this first: https://www.investing.com/analysis/the- ... -200204706
My guess is that this is a big reason why the weekly forecasts for draws from U.S. crude oil storage have been much lower than the actuals over the last 6-8 weeks.
I have been tracking this stuff for decades. This happens because EIA's formulas for their weekly estimates of U.S. production are heavily weighted to the trend. They ALWAYS MISS the turning points of the cycle.
The U.S. is now heavily dependent on shale and other tight oil plays for production. These tight oil plays are being developed with horizontal wells. They are completed with massive frac jobs. They come on fast, but have steep decline curves. The U.S. depletion rate will get higher year-after-year.
Conclusion: U.S. black oil production will not reach 10,000,000 BOPD as fast as most analysts think it will and my SWAG is that it will not reach 12,000,000 BOPD unless oil prices go a lot higher and stay there.
U.S. production is the biggest "WAG" each week since EIA has no way of knowing what actual production is. The upstream companies themselves don't know for sure.
Actual production is on a 60 day lag. It is based on state reports, which are much more accurate but they are often adjusted for months since the upstream companies can file amended reports with the states.
EIA just posted "actual" production for May and it is the 2nd month in a row that their weekly reports were more than 150,000 BOPD above actuals. < This is a BIG DEAL.
See for yourself: https://www.eia.gov/dnav/pet/hist/LeafH ... RFPUS1&f=M
Actual Production / Days in the month = Oil produced per day > Here is what EIA reported in the weekly reports for the last five month
2017:
Jan: 274,597,000 bbls / 31 days = 8,857,968 BOPD vs 8,941,500 BOPD per the EIA's weekly reports
Feb: 254,100,000 bbls / 28 days = 9,075,000 BOPD vs 8,997,000 BOPD per the EIA's weekly reports
Mar: 282,322,000 bbls / 31 days = 9,107,161 BOPD vs 9,134,400 BOPD per the EIA's weekly reports
Apr: 272,481,000 bbls / 30 days = 9,082,700 BOPD vs 9,291,250 BOPD per the EIA's weekly reports < WOW!
Mar: 284,230,000 bbls / 31 days = 9,168,710 BOPD vs 9,320,250 BOPD per the EIA's weekly reports < Double WOW!
So, for April and May, the EIA has over-reported U.S. oil production by 208,550 BOPD in April and 151,540 BOPD in May. What do you think oil prices would have done if EIA had reported a decline in U.S. production from March to April?
Phil Flynn saw this first: https://www.investing.com/analysis/the- ... -200204706
My guess is that this is a big reason why the weekly forecasts for draws from U.S. crude oil storage have been much lower than the actuals over the last 6-8 weeks.
I have been tracking this stuff for decades. This happens because EIA's formulas for their weekly estimates of U.S. production are heavily weighted to the trend. They ALWAYS MISS the turning points of the cycle.
The U.S. is now heavily dependent on shale and other tight oil plays for production. These tight oil plays are being developed with horizontal wells. They are completed with massive frac jobs. They come on fast, but have steep decline curves. The U.S. depletion rate will get higher year-after-year.
Conclusion: U.S. black oil production will not reach 10,000,000 BOPD as fast as most analysts think it will and my SWAG is that it will not reach 12,000,000 BOPD unless oil prices go a lot higher and stay there.