EIA Data Shows Rig Count Doesn’t Matter

The EIA has published their Petroleum Supply Monthly with all US production numbers through December 2014. The chart below shows the largest changes in December and Yearly production. Almost every state had a production increase. The largest decliner was Wyoming, down 7,000 bpd. Below are the biggest gainers and the amount of their production increase in thousand barrels per day for December and the whole year.

The Gulf of Mexico was up 68,000 bpd in December but was down 56,000 bpd in November. The EIA had great hopes for the GOM expecting it to hit 2 million barrels per day in 2016. I don't think that is going to happen. GOM production now stands at 1,441,000 bpd.

Related: Could Oil Prices Plummet A Second Time?

Alaska's decline seems to be slowing down slightly. They are now at 520,000 bpd.

The US oil production was up 187,000 barrels per day in December and 1,366,000 bpd for the year to 9,226,000 bpd. The consensus among many in the media is that US production will just keep on increasing.

Related: Don't Read Too Much Into The Rig Count

Business Insider says Rig Counts Don't Matter. They said, bold theirs:

"The rig count decline is still not sufficient, in our view, to achieve the slowdown in US production growth required to balance the oil market."

And they posted the below chart to prove it. (The oval and circle inserts are mine).

The rig count turned down two months ago but production has not started to drop yet. Therefore we can infer that rig counts don't matter. But rig count started to rise in 2009 and it was late 2011, two years later, before production started to rise by very much. Even then there continued to be over a one year lag time between increasing rig counts and increasing production.

By Ron Patterson of http://peakoilbarrel.com/ 

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