Global Oil Production On Pause, But Decline Seems Imminent
One hundred and seventy-six years after the birth of John Boyd Dunlop, and the crude complex is coming under pressure again.
It is Nonfarm Friday, which means that the market is all a’flustered, digesting the soon-to-be-revised official monthly U.S. unemployment report. The report was fairly underwhelming from a headline perspective; only 151,000 jobs were created last month, versus an expectation of 190,000.
That said, there was some solace to be found for those of a glass half-full persuasion, as not only did the unemployment rate tick to a new eight-year low of 4.9 percent, but average weekly hours worked ticked higher, and the participation rate continued to clamber away from multi-decade lows, reaching 62.7 percent. A little bit for everyone here.
U.S. unemployment rate, 2007 – present (source:investing.com)
Related: The $2 Trillion Gift From Oil Companies To Consumers
Perhaps the most interesting statistic of the day, however, has come from Wood Mackenzie, who says that only 0.1 percent – or 100,000 bpd – of global oil production has been curtailed thus far due to the price slump. It says this drop, albeit modest, has come from the Canadian oil sands, U.S. conventional production, and from the UK’s North Sea.
Wood Mackenzie estimates that 2.2 million barrels per day of Canadian production is currently ‘cash negative’, while so is 230,000 bpd of Venezuela’s heavy oil production, and 220,000 bpd of production from the North Sea. It is also important to note that although we are not seeing considerable production losses, we are seeing a lot of oil being left in the ground that otherwise would have been extracted.
Production on pause, so to speak. It would seem that 100,000 is the number of the day, as it is also the number of job losses seen from the U.S. oil and gas industry since October of 2014.
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