U.S. Oil Production keeps falling per EIA 941 report

[dan_s]

The EIA's monthly 941 report is the first time we get to see actual production of oil in the U.S. based on state reports and federal data for offshore wells. The 941 for December was released last week. October is the most recent month of actual data that EIA has because there is a two month lag in upstream companies reporting to each state they operate in. State filings are often amended, but the national total is seldom adjusted by a material amount.

U.S. oil production declined by 442,000 barrels per day from September to October. 10,861,000 to 10,419,000 BOPD. Hurricane activity in mid-October did cause Gulf of Mexico shut-ins mid-month. EIA's weekly reports estimates show that U.S. production bounced back quickly to 11 million BOPD by mid-November and EIA has been reporting that level of production week after week since.

U.S. oil production peaked in November, 2019 at 12,860,000 then declined for four straight months even before there was any impact from the pandemic. U.S. production normally declines in the first quarter of each year because of winter weather's impact on field operations. The decline from November to December in 2019 was a bit odd.

So, U.S. oil production declined 2,441,000 barrels per day in eleven months. My guess is that non-OPEC+ production is down at least 4 million and maybe as much as 6 million BOPD. OPEC+'s production capacity is probably much lower than they will admit since most of the cartel member countries are broke and probably haven't been able to afford much D&C spending.

There may be an increase in U.S. oil production heading into year-end as there was an increase in well completions in order to pad year-end proven reserves. Look for weather to have a negative impact on production in Q1. Plus, we aren't completing enough new wells to hold production flat. I follow a lot of upstream companies and very few will be funding a material increase in their drilling programs.

This is going to be a VERY INTERESTING year.