• 1 day PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 1 day Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 1 day Syrian Rebels Relinquish Control Of Major Gas Field
  • 2 days Schlumberger Warns Of Moderating Investment In North America
  • 2 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 2 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 2 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 2 days New Video Game Targets Oil Infrastructure
  • 2 days Shell Restarts Bonny Light Exports
  • 2 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 2 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 2 days British Utility Companies Brace For Major Reforms
  • 2 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 3 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 3 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 3 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 3 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 3 days Rosneft Signs $400M Deal With Kurdistan
  • 3 days Kinder Morgan Warns About Trans Mountain Delays
  • 3 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 3 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 3 days Russia, Saudis Team Up To Boost Fracking Tech
  • 4 days Conflicting News Spurs Doubt On Aramco IPO
  • 4 days Exxon Starts Production At New Refinery In Texas
  • 4 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 5 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 5 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 5 days China To Take 5% Of Rosneft’s Output In New Deal
  • 5 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 5 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 5 days VW Fails To Secure Critical Commodity For EVs
  • 5 days Enbridge Pipeline Expansion Finally Approved
  • 5 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 5 days OPEC Oil Deal Compliance Falls To 86%
  • 5 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 6 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 6 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 6 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 6 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 6 days Aramco Says No Plans To Shelve IPO
Alt Text

This Unexpected Move Could Derail Mexico’s Oil Boom

A possibly disastrous move from…

Alt Text

OPEC Looks To Permanently Expand The Cartel

OPEC Secretary General Mohamed Barkindo…

Alt Text

How OPEC Continues To Cheat On Its Own Deal

OPEC oil production has once…

Nick Cunningham

Nick Cunningham

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

More Info

Decline In U.S. Oil Production Accelerates

Decline In U.S. Oil Production Accelerates

New EIA data once again points to a deeper contraction than previously expected.

The revelation was initially revealed in late August, when the EIA reported that the United States produced much less oil than expected in the first half of 2015. On the whole, the country produced 40,000 to 100,000 fewer barrels than previously reported between January and May. The August report also showed that U.S. oil production peaked in April at 9.6 million barrels per day (mb/d), before falling to just 9.3 mb/d in June.

The declines suggested that the contraction in the U.S. shale industry was deeper than the world had initially thought. And one can only assume that the decline either kept up at a similar rate, or even accelerated in the intervening months since June.

The latest data from EIA confirms this trend. In its Short-Term Energy Outlook released on September 9, the EIA estimates that the U.S. oil industry lost another 140,000 barrels per day between July and August. That is a faster rate than the 100,000 barrels lost in June. Moreover, the agency predicts that output will continue to decline for another year until August 2016, before picking up again.

The U.S. is expected to produce 9.2 mb/d on average in 2015, which will drop to just 8.8 mb/c in 2016. Both of those figures are 0.1 mb/d lower than last month’s projection. Related: 2020 Could Mark The Tipping Point For U.S. Solar

(Click to enlarge) Related: The Oil Bust Is Great For Business Here

This contraction is one of the biggest determining factors to oil prices finding their footing. At its expected low point one year from now in August 2016, U.S. oil production will bottom out around 8.6 mb/d, about 1 mb/d below the peak reached this past April. That could go a long way to cutting into excess global oil supplies.

Unfortunately for many oil executives, OPEC could offset the declines from the American oil patch. The EIA predicts OPEC production will rise from 30.97 mb/d in the second quarter of 2015 to 31.19 mb/d in the third quarter. A year after that, EIA believes, OPEC could still be producing over 31 mb/d per day. Following the nuclear agreement between Iran and the West, Iran could bring back some of its oil production. The EIA estimates that Iran will add 0.3 mb/d by next year. In other words, OPEC won’t cut back on production even though oil prices are below $50 per barrel.

Taken together, global supplies could actually increase between now and the end of next year, despite a significant pullback in U.S. oil production. Put in this context, it appears that OPEC’s strategy of pursuing market share by forcing higher cost producers to cutback could bear some fruit. Even if it takes longer and the adjustment is not as sharp as expected, Saudi Arabia will maintain its grip on the market, pushing U.S. shale to contract.

A separate EIA report confirms this trend. Saudi Arabia kept oil exports elevated throughout the oil bust, holding onto market share in several key Asian countries that account for much of the recent growth in oil demand. For example, despite China’s oil demand rising substantially in the first six months of 2015 compared to the same period a year earlier, Saudi Arabia held onto 16 percent of the Chinese market.  Related: Does Selling Oil From The Strategic Petroleum Reserve Make Sense?

(Click to enlarge)

With Saudi Arabia keeping oil production elevated, and potential gains from other OPEC members like Iraq and Iran, oil prices may not rebound in the way that everyone expected. The EIA revised its projection for oil prices downwards once again, taking into account the rout suffered in the oil markets in August. Next year, WTI will average $53.57 per barrel and Brent will sell for $58.57 per barrel, which is down 1.4 percent from last month’s forecast. In 2014, WTI sold for $93.17 per barrel and Brent went for $98.89.

The climb back to those 2014 levels will take a long time.

By Nick Cunningham of Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment
  • grahamzilla on September 11 2015 said:
    Until our girl Yellen adds money to the system and then price will increase as dollar values fall.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News