2nd October 2015
The U.S. onshore rig count took a dive this week, releasing 26 more rigs for a six-week decline of 74. The latest EIA data release shows LTO production slipping a further 56,000 barrels per day in July, taking the four month decline to over 300,000 barrels of oil per day. The news hitting the market also caused the oil price to jump by more than a dollar.
25 Sep 2015 - Steady As She Goes … Down
18 Sep 2015 - Not All Rigs Released are Equal … The Ones Today Impact Future Production More!
11 Sep 2015 - Death by 1,059 Cuts … U.S. Oil Production Really Is Declining!
Factoring this in with the help of GCA’s North American Unconventional Model*, U.S. production looks set to decline to under 9 million barrels per day this month and 8.8 million barrels per day by the end of the year.
The total number of active rigs now stands at 779, down 1,097 (58%) from a November 2014 high of 1,876. Across the three major unconventional basins, the oil rig total declined to 375 (down 13 last week), with Eagle Ford down 5, Permian down 7, and Williston down 1. Horizontal rigs decreased by 20, bring the total number to 609.
Total U.S. rig count (including the GOM) declined 29 last week, with rigs targeting oil declining by 26 for a five-week total of 61, a 43% decline last week.
Before the news of this weeks’ rig count on Friday, the oil price had spent the week trading within a US$2-3 per barrel range, pushing the bottom of the range under the news of weaker than expected U.S. economic data. Immediately thereafter, it jumped by more than a dollar, closing out the week not far off where it started with WTI at around US$45.50 per barrel and Brent at a little over US$48 per barrel.
The supply-demand news tic-toc impact on oil price movements is still alive and well …
U.S. Supply and Demand…..
U.S. crude oil refinery inputs averaged 16 million barrels per day, with refineries at 89.8% of their operating capacity last week.
Looking on the supply side, U.S. oil production in the Lower 48 declined by 21,000 barrels per day last week, bringing total production down to 8.627 million barrels per day.
U.S. crude imports averaged 7.6 million barrels per day last week, up by 378,000 barrels per day from the previous week.
With demand at 16 million barrels per day, down 241,000 barrels per day and imports up 378,000 barrels per day, crude oil inventories increased by 4 million barrels from the previous week. At 457.9 million barrels, U.S. crude inventories remain above historical levels. Total additional inventory for September was 2.5 million barrels, in line with previous years.
* GCA’s outlook for future LTO production is taken from an in-house model of the Bakken, Eagle Ford and Permian basins. Based on the actual performance data of individual operators, the model has the ability to handle multiple type curves for each, while varying assumptions as to future activity in the context of overall acreage quality and availability.
For more details, contact either of the authors.
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