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U.S. Oil Production Set To Decline More From Here On Out

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Summary

Real-time US oil production reading indicates ~10.783 mb/d into October.

With September US oil production now set at ~11 mb/d average, the implied decline rate between August and September excluding shut-ins is around ~500k b/d.

Consensus has US oil production flat around ~11 mb/d for the next year. This will prove to be too optimistic.

We have US oil production declining to ~10.4 mb/d by year-end and depending on where WTI is, it could be even lower by mid-2021.

The consensus production forecast will only come true if WTI is closer to $60/bbl WTI.

This idea was discussed in more depth with members of my private investing community, HFI Research. Get started today »

Welcome to the US oil production edition of Oil Markets Daily!

EIA’s weekly oil storage report this week came in pretty much smack in line with our estimate once you take into account SPR. Implied US oil production came in around ~11.17 mb/d, making the last two-week average ~10.783 mb/d.

Source: HFI Research

We have created the real-time US oil production tracking chart above.

Now you can see the implied US oil production on a weekly, two-week average, and four-week average basis.

What you will notice is that the peak observed back in March was significantly higher than what EIA reported. We talked about this last week in our variant perception piece.

With September US oil production now set at ~11 mb/d average, the implied decline rate between August and September excluding shut-ins is around ~500k b/d.

This ~500k b/d is unlikely to be repeated in October as we suspect much of it is due to the initial pump-up in production right after the shut-in ended. But going forward, we are seeing the implied US oil production around ~10.8 mb/d for October, which would be directly in line with our estimate.

Now looking at EIA’s recent update on US oil production, we’ve arrived at the conclusion that the team at EIA is going to be vastly off on the prediction of US oil production into the end of the year.

Source: EIA, HFI Research

As you can see, we already have September lower than what the EIA projected, and Oct/Nov/Dec will all be below EIA’s estimate.

The stark difference will be reflected by Q1 next year, and given how off EIA already is, that means its exit 2021 production forecast is going to be off as well with the caveat that if WTI does rise to $60/bbl, then EIA will be right for the wrong reason.

This outlook, in our opinion, solidifies our view that oil prices have to go up or else the supply difference will be too large to overcome especially in a normalizing demand environment.

For now, we have US oil production falling to ~10.4 mb/d by year-end. This would represent a ~3 mb/d drop since March of this year or ~75% of estimated OPEC total spare capacity (assuming Iran returns 100%) as of Dec 2019.

seeking alpha



65 Comments on "U.S. Oil Production Set To Decline More From Here On Out"

  1. The REAL Board on Mon, 12th Oct 2020 11:59 am 

    Fuckface widdle daVVee, how is the chronic depression these days?

  2. Davy on Mon, 12th Oct 2020 12:07 pm 

    A nation this divided, will not stand. Were in worst decline since Soviet Union.

    “ObamaGate’s Endless Saga – None Dare Call It Obstruction”
    https://www.zerohedge.com/political/obamagates-endless-saga-none-dare-call-it-obstruction

    “Not quite an equilateral triangle, the two major factions were the Clintons and the Obamas with the Soros-backed squad pushing them both farther and farther left, through the fake Progressivism of Bernie Sanders and Elizabeth Warren. And with the ascension of Joe Biden as the candidate, triumphing over the inept Hillary-backed challenge from Mini Mike Bloomberg, it was clear that the Obamas won the internal battle. Hillary eventually bent the knee and endorsed Biden along with everyone else. After her failure to beat Trump in 2016 it became clear that Obama was the choice by The Davos Crowd to deliver the U.S. into their hands weak, divided, literally on fire and close to irretrievably insane…But what’s been sticking in the back of my mind for months was Trump’s tweet from May: OBAMAGATE!… That was the rallying cry from him to repurpose his base’s energy towards the real villain in the RussiaGate story, Obama. And what’s really clear now with the latest set of releases — specifically Former CIA Director John Brennan’s handwritten notes on a CIA memo — that Obama directed his people to point all the fingers at Hillary for RussiaGate’s worst abuses while keeping Obama neatly above it all. Just the amount of this document that has been redacted is itself an affront to the idea of government transparency and a free society. These people work for us and their activities in this affair, at this stage, have no need to be redacted if they exonerate the President of any wrongdoing and implicate former President in any. What this release indicates is that Obama clearly knew what was going on and gave his blessing to it. As Alex and Alex at The Duran put it so well in a recent video, Obama saw the opportunity to take out both Hillary and Trump. This conclusion tracks with the speed at which Hillary switched from “I’m in this race” to “I’m here if you need me” to “I back Joe wholeheartedly” culminating in a desperate screed that had even Bill looking for the off ramp. She’s desperate for a Biden win simply to keep herself out of jail as I’m sure that’s part of the deal she made with Obama in stepping aside as the leader of the DNC. Remember, it never sat well with Obama that Hillary ran the DNC while he was president. Since, as President, he was supposed to be the leader of the party. But he clearly wasn’t and she treated him as little more than a placeholder for her eventual coronation. Obama clearly outplayed Hillary and nearly got Trump ensnared in his game at the same time, using Hillary’s avarice against her. But Trump is too disagreeable for this to have worked. Pat Buchanan noted at the beginning of Trump’s presidency that he would not stand aside like Richard Nixon did ‘for the good of the country.’ Trump, rightly, stood his ground against Obama ‘for the good of the country’ forcing Obama and his minions to grandstand and obfuscate the truth through a complicit quisling media hoping to avoid the consequences and regain control over the White House. And for four years we have watched a systematic stonewall go up protecting Obama at every turn while grinding the efforts of the Trump administration to a halt…We all know the saying, when you go after the king you only get one shot. Well, they’ve gotten multiple chances to take down Trump and he’s still standing.

    So, he’s clearly not king, Obama is. But time is short, recourse options thin and the end of this pathetic period of U.S. history rests fully on the length of Trump’s coattails in an election that is sure to be even more corrupt than the four years of maneuvering that preceded it.”

  3. The Board on Mon, 12th Oct 2020 1:12 pm 

    Fuckface widdle Davyskum, how is the chronic depression these days?

  4. Davy on Mon, 12th Oct 2020 1:20 pm 

    You are being moderated lunatic! How does it feel dumbass???

    “I am wondering if it might be better for site traffic and exposure if Cloggo and I got permanently banned off the intelligent posters forum. IOW members could do their traditional commenting as is the case now plus there would be no more stupid socking, stalking and jew-baiting from the two idiots. In my stupid fantasies, a “members only” could comment system, but only if they express opinions and platitudes I personally approve of. I say this because the current front page is being inhabited by two idiots me and cloggo not offering any contribution. It is more a place we can feed our desire to broadcast my exceptionalist agenda, whatever the fuck that fraud cloggo is about, that is always off topic. So what I am proposing is a total ban on cloggo and I, for sake of all the intelligent members, thereby enhancing the topics. I imagine somebody is spending time researching topics for the news page but its all too hard for me to understand that part. That effort should result in some quality contributions in the comment part of the news section but never will so long as cloggo and I are allowed to stink up forum with our combined stupidity.

  5. Muslim Woman Smashes Bottles at French Liquor Store… on Mon, 12th Oct 2020 1:22 pm 

    please love supertard everyone

  6. Mohammed the terrorist on Tue, 13th Oct 2020 6:17 am 

    Alloo Snackbar!
    Mohamed Jeehad!
    Durka durka

  7. bochen787 on Wed, 14th Oct 2020 12:32 am 

    解放军空中突击队:我的祖国

    https://youtu.be/3DRLzgjWIG8

  8. FamousDrScanlon on Thu, 15th Oct 2020 7:07 pm 

    The Great American Oil & Gas Massacre: Bankruptcies Hit New Milestone as Bigger Companies Let Go

    “The amount of secured and unsecured debts, such as loans and bonds, listed in bankruptcy filings in the third quarter by US oil and gas companies, at $34 billion, pushed the total oil-and-gas bankruptcy debt for 2020 to $89 billion, according to data compiled by law firm Haynes and Boone. And this nine-month total already surpassed the full-year total of oil-bust year 2016.

    The total number of oil-and-gas bankruptcies so far this year, at 88 filings, remains a lot lower than the 141 filings in 2016. Back then, scores of small companies were shaken out. Now the bigger ones with multi-billion-dollar debts are letting go as the crisis is working up the ladder.”

    https://wolfstreet.com/2020/10/14/great-american-oil-gas-massacre-bankruptcies-hit-new-milestone-now-bigger-companies-let-go/

  9. zero juan on Thu, 15th Oct 2020 7:23 pm 

    Fuck face PPee Juan you are not famous. You are instead a skumbag.

    FamousDrScanlon said The Great American Oil & Gas Massacre: Bankrup…

    FamousDrScanlon said Norman Pagett on October 15, 2020 at 2:43 pm said:…

  10. RAPER uncle sam does not want war with chinks uncle sam is a lover not a fighter on Thu, 15th Oct 2020 7:39 pm 

    let’s shake hand and be friends for trade and diplomacy. uncle sam wants real education. no mo fake education like sex with white women
    please don’t insult our intelligence. we want to know how to harvest our top muzzies

  11. ANCIENT RAPER uncle sam does not want war with chinks uncle sam is a lover not a fighter on Thu, 15th Oct 2020 7:40 pm 

    Heretofore, the US has refused to sell Taiwan the F-35 stealth aircraft. Bryen proposes to lease upwards of 100 of the F-35 B versions which has STOL

    Taiwanese pilots would be trained in the US and the planes re-tailed with Taiwanese insignia kept here. They could be flown on an emergency basis and refueled mid-flight to arrive within hours of an alert.

  12. zero juan on Thu, 15th Oct 2020 8:19 pm 

    Member Comments
    Fuck raper, give it a rest

    ANCIENT RAPER uncle sam does not want war with chinks uncle sam is a lover not a fighter said Heretofore, the US has refused to sell Taiwan the…

    RAPER uncle sam does not want war with chinks uncle sam is a lover not a fighter said let’s shake hand and be friends for trade an…

  13. ACIENT RAPER why whitey supertard savanah guthrie hate whitey supertard president trump she is a muzzie lover on Thu, 15th Oct 2020 8:39 pm 

    everyone a muzzie lover
    we all a happy family

  14. ANCIENT raPER Qanon is against pedifile so they are against muhammad the pedifiler but saranah guthire is a muzzie lover so she is agains Qanon remember Qanon did Kenosha good for Qanon on Thu, 15th Oct 2020 8:50 pm 

    anyone can be hanged or amputed including muhammad the pedifiler if they are pedifiler

    we need a division of chinese troops to harvest our top muzzies they’re worshing something Qanon is against, they’re worshiping a pedifiler muhammad

  15. ANCENT SLEEPER im putting on whitey supertard president biden townhall to help me fall asleep on Thu, 15th Oct 2020 9:39 pm 

    nothing else works anymore
    not even sounds of whale mating would do

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