EIA has been overstating U.S. crude oil production

[dan_s]

Recently EIA started counting NGL's being blended into crude oil by the refineries as more U.S. "oil production". Winter Blend gasoline can include a lot more NGLs than Summer Blend gasoline. So, this is the primary reason EIA has been reporting a steady increase in U.S. "oil production" over the months heading into the winter. The people that sign the paychecks over at EIA want lower gasoline prices.

This knife cuts both ways because once we get into Q2 less NGLs can be blended with crude oil, so EIA will need to report a steady decline in U.S. "oil production".

From HFI Research today:

Thanks to the holiday season, US oil production data for October practically went unnoticed. EIA's monthly oil reporting showed US oil production coming in at 13.248 million b/d. Transfers to crude oil supply came in at a static ~735k b/d, while the adjustment factor, once again, surprised to the downside at -373k b/d.

Using our old methodology of figuring out the total crude oil supply:

13.248 + 0.735 + (-0.373) = 13.61 million b/d

Now here's where things get interesting. Because EIA figured out the "transfers to crude oil supply" or aka "blending", we can just use the adjustment figure to calculate real US oil production.

That methodology produces:

13.248 - 0.373 = 12.875 million b/d

Effective US oil production for October came in at 12.875 million b/d. To EIA's credit, ever since they introduced "transfers to crude oil supply", their adjustment figures have been very close to zero (after adjusting for imports/exports).