psw01 2016-1-21
Recently I saw a published analyst state that US production is now essentially the same as it was in January 2015 since for the week of January 23, 2015 US production was reported by EIA as 9.213MM bbl/day and for the week of January 29, 2016 it was 9.214MM bbl/day. However, nothing could be further from the truth. For starters when Unaccounted for Oil is included the January 2015 weekly average was 9.55MM bbl/day compared to 9.13MM bbl/day for January 2016. This is a 426K bbl/day decrease year over year, a 4.5% drop.
Then we should factor in the 2000 well completions/month in Texas during the summer of 2014 and 1500 well completions per month in the last several months of 2014. North Dakota was running over 250 completions/month during the summer of 2014 and finished the year running about 140 completions/month. Currently Texas is doing less than 800 completions/month and ND is doing about 20-30/month.
While US production surged into the beginning of 2015 and was set to surge for many months more, albeit slower than in late 2014 and early 2015, US production is has been falling for months and is set to accelerate that decline in coming months.
With Canadian tar sands set to go into maintenance in March, possibly in February, and US declines set to hit in a big way at the same time, US inventory will not build at anywhere close to the rate that bears expect. Some are talking of topping out inventory. They will be shocked.
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