Is The EIA Too Optimistic On U.S. Oil Output?
After following the weekly production statistics avidly for some months and initially being smugly pleased by the data saying exactly what I wanted to hear, I then became completely befuddled by the data saying the opposite. I had almost reached the conclusion that the weekly production data wasn’t worth paying attention to.
I apologise to the EIA for saying that, it is a Herculean task to capture production data across the United States of America on a weekly basis and even that fleeting thought did them a disservice. But I have poked and prodded the data and I think lurking within it, like a chicken’s entrails on the altar, are the signs of what will happen in the year to come. So I have created a forecast of US production in 2016 and a forecast of how the 2015 data will eventually be revised (which is why I have titled this article a 2015 to 2017 production forecast).
This is the chart that first pleased and then befuddled me. It had pleased me to see the rapid drop off in US production, which sat well with my expectations of very high decline rates from shale oil wells, it befuddled me to see US production climb week after week, as companies cut back on investment and stacked rigs.
What I am showing in the chart above are three sets of data from the EIA, the dark blue line is made up from the weekly production estimates; the deep green is the monthly production data and the pale green is the monthly forecast production from the Short Term Energy Outlook. There is an important difference between the weekly estimates and the monthly figures. The latter get revised, the former don’t.
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