As a powerful oil market mover, the EIA needs to have “more sophisticated” forecasts about U.S. shale production, because overly optimistic expectations depress oil prices and disadvantages the U.S. market, shale billionaire and Continental Resources chief executive Harold Hamm said in an interview with Bloomberg published on Thursday.
The EIA is “a very powerful market mover, and so it’s necessary they understand all of these things,” said Hamm who is scheduled to take part in an EIA webinar on crude oil production forecasts later on Thursday.
“EIA is on that world stage with us, as the swing producer in the world, and so it’s going to require better, more sophisticated methods of forecasting -- more so than ever before,” Hamm told Bloomberg.
According to the billionaire oil executive, the EIA needs to hear “meaningful feedback” from the shale producers and oilfield service providers about their production challenges.
“It’s pretty easy to get enamored” by technology, and “some people tend to go too far with it,” Hamm told Bloomberg.
Over the past few months, Hamm has been one of the most vocal critics of EIA’s overly optimistic forecasts for U.S. oil production. Related: Why Saudi Arabia Should Fear U.S. Oil Dominance
On September 14, Hamm told CNBC that he was concerned with EIA’s over-forecasting, and said that as the unbiased authority on supply in America, the Energy Information Administration needs “the same tools that we have in the industry.”
A week later, Hamm said that “EIA over-forecast what U.S. production was going to be this year by about 100 percent,” adding that the EIA had been revising its production estimates down, but by a much more moderate rate than the actual decline in production.
Earlier this year, when OPEC was just two months into the production cut deal, Hamm warned that if the U.S. oil industry embarked on another spending spree, it could “kill” the market. Production could go pretty high, but it should be in “a measured way, or else we kill the market,” Hamm said in early March.
By Tsvetana Paraskova for Oilprice.com
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