EIA Overestimates US Production, Huge Production Drop in the Works #7

It looks like EIA continues to grossly overestimate US production, even showing a slight increase in total US production and in lower 48 production this week.  It looks to me like the 174k bbl/day (5.5%) surge in imports from Canada this week driving a bigger than expected uptick in Midwest and Cushing inventories has fooled the model used to estimate weekly production again.  This is a huge disservice to many traders and investors who continue to expect falling crude prices driven by "resilient" US production.  They just can't understand how crude prices keep surging after supposedly such bearish news on production.

When unaccounted for oil is factored in, it can be clearly seen there is a problem with the production data especially when this is coupled with reported well completion (frack) rates from the states of Texas and North Dakota.   Reported completion rates support an approximate 2%/month or more total production decline with recent months showing no change in that trend.

The continuous negative values and the magnitude of those values in unaccounted for oil since Dec. 4 is truly unprecedented.   Since then 9 of 13 weeks EIA has reported a negative value for unaccounted for oil.  The chart above clearly indicates that unaccounted for oil was typically positive over the prior 2 years.  In fact unaccounted for oil averaged 184k BPD over the 2 year span prior to Dec. 4.  However, since Dec. 4 unaccounted for oil has averaged -142k BPD, a huge divergence.  Cumulatively since Dec. 4 unaccounted for oil totals 14MM barrels.  If unaccounted for oil were to be zero'd out in a single week it would require a 2MM BPD adjustment.  At some point the production estimation model will be adjusted to either zero out this error or return it to typically showing positive unaccounted for oil.  The chart below graphically shows how the error has been building on a weekly basis, and clearly indicates the trend will continue until EIA starts reporting much lower weekly production numbers.  I expect that to happen as Canadian imports drop with seasonal maintenance.