US Government Cuts 2015 Domestic Oil Production Forecast

The U.S. government on Tuesday cut its forecast for domestic oil production growth in 2015 by about 100,000 barrels per day and trimmed its forecast for global oil demand growth next year by 240,000 bpd.

The U.S. Energy Information Administration now expects U.S. production next year to rise by 720,000 bpd to around 9.3 million bpd, according to its monthly short-term energy outlook. A month ago, it was forecasting a 850,000-bpd rise next year.

Last month, the EIA trimmed its 2015 U.S. production outlook by 100,000 bpd to an average of 9.4 million bpd.

World oil demand next year is now expected to grow by 880,000 bpd, the agency said on Tuesday. It had previously forecast the year-on-year increase at 1.12 million bpd.

The lower forecasts come amid a sharp slide in global oil markets, with the price of oil trading near five-year lows on a combination of global oversupply and lackluster demand.

U.S. crude oil, however, was trading up 37 cents at $62.68 a barrel on Tuesday, while Brent was trading up 29 cents at $65.90 a barrel. The price of crude has fallen some 40 percent since June.

Prices already were declining when the Organization of the Petroleum Exporting Countries (OPEC) said last month it would not cut production, an indication of its members’ desire to retain market share. The decision led to a further sell-off in oil markets.

The EIA said it expects OPEC crude oil production to fall by 100,000 bpd in 2014 and by 200,000 bpd in 2015.

RIGZONE

13 Comments on "US Government Cuts 2015 Domestic Oil Production Forecast"

rockman on Wed, 10th Dec 2014 8:47 am 



“The EIA now expects U.S. production next year to rise by 720,000 bpd to around 9.3 million bpd”. Amazing when you consider that A) the increase will be a function of how many wells will be drilled and B)all the operators I’ve spoken with, in particular the shale players, have no guess as to how many wells they’ll drill in 2015. They can guess X number of wells at an oil price of $Y but don’t now what that $Y will average for the year.

Of course, that’s what I hear from the folks that actually make the drilling decisions and not the pubco PR departments. In the case of the EIA it’s always interesting to hear what groups who have never drilled a well predict how many holes will be poked by those that do. They probably chat with the pubco PR departments a lot. LOL.

Davy on Wed, 10th Dec 2014 9:17 am 



Article said – World oil demand next year is now expected to grow by 880,000 bpd, the agency said on Tuesday. It had previously forecast the year-on-year increase at 1.12 million bpd. The lower forecasts come amid a sharp slide in global oil markets, with the price of oil trading near five-year lows on a combination of global oversupply and lackluster demand.

Hey corns is that the definition of an oil glut? Sounds like the new normal definition of an economic oil glut i.e or speaking French “a shitty economy oil glut”.

Northwest Resident on Wed, 10th Dec 2014 10:03 am 



rockman — I think it is a pretty safe bet that any public announcements and communications being made by the EIA are designed solely and exclusively to influence (manipulate) public perception and opinion. If EIA can throw a few actual facts into their communications to support their main goals, so much the better. If not, then they’ve got a BS creation department to handle that.

shortonoil on Wed, 10th Dec 2014 10:42 am 



The US energy sector is now on the hook for $500 billion in junk bonds, and $300 billion in leveraged loans. Those bonds were sold, and loans taken out when interest rates were 4%. CCC rated bonds are now 8.7%, and rising. Some of those bonds, and loans will mature this coming year, and will have to be rolled over, or paid off. Since few, if any, of the shale operators have made any real money (they have just been pyramiding their debt in a low interest environment) there is going to be one mad scramble for what ever funds are available in a market that is showing growing liquidity problems.

Did the EIA take into consideration that we now have another sub prime mortgage market in the shale industry? The situation is not likely to turn out as well as they expect!

http://www.thehillsgroup.org/

JuanP on Wed, 10th Dec 2014 11:11 am 



When the EIA, BP, and IEA report on PAST production and consumption, I take the time to read carefully, analyze, and digest the info provided.

When they start hallucinating about the future, I sit back and prepare for some good laughs. I particularly enjoy their regular long term reports on their dellusions and hallucinations.

I have been reading BP, EIA, and IEA stuff for over ten years now, and they always make ridiculous proyections and predictions of future endless exponential economic growth and seemingly inexhaustible energy supplies that will magically become available as needed.

Juan predicts that it will rain in the future, even in Sao Paulo and California!

Plantagenet on Wed, 10th Dec 2014 12:12 pm 



Who ever seriously expected the obama administration to predict that US oil production is going to drop dramatically in 2015? OF COURSE the administration is going to say that US oil production won’t be affected by the oil glut and collapse in oil prices. Now get out there and shop!

Perk Earl on Wed, 10th Dec 2014 12:54 pm 



http://www.bloomberg.com/energy/

The EIA may want to revise those numbers as the price of oil continues to drop.

http://www.bloomberg.com/energy/

WTI -2.69 to 61.13
Brent -2.55 to 64.29

So WTI is now closing in on a possible sub 60 price and Brent has just descended below 65.

Is it possible that even at these lower prices demand is not rising enough to absorb supply to swing the price in the other direction?

shortonoil on Wed, 10th Dec 2014 2:15 pm 



Is it possible that even at these lower prices demand is not rising enough to absorb supply to swing the price in the other direction?

This recent drop appears to be coming from two sources. Inventories are higher than what was projected, and Saudi Arabia is again saying they are not going to be the first one to cut production.

Our model puts the 2015 WTI price at $76.

http://www.thehillsgroup.org/depletion2_022.htm

But, $61 is getting a pretty long way from $76, but markets do sometimes, for short periods, display completely irrational behavior. I would expect that over the next few weeks prices will start to move back up toward the $76 level. If they don’t we had better call Houston – we’ve got a problem.

Perk Earl on Wed, 10th Dec 2014 2:26 pm 



“Inventories are higher than what was projected,…”

That is an inference consumption is not rising as expected.

$76. sounds about right for WTI. Price usually does swing too far until investors are convinced they can’t lose any getting back in.

Fascinating to watch this unfold.

Speculawyer on Wed, 10th Dec 2014 5:19 pm 



$61/barrel. Wow. Iran, Russia, and Venezuela have to be freaking out these days. Iran has publicly called it ‘treachery’ . . . a veiled slam at their Sunni foe, Saudi Arabia.

Rockman, I think you are dead on about the difference between the actual drilling and the PR. I find it quite interesting how there was a lot of ‘shale is only profitable above ~$85/barrel a few months back and now the PR people are saying ‘we can still make a profit at $45/barrel’ these days. I’m sure their techniques have improved but not that much. Some skepticism is warranted. But Wall Street wants to believe. (Or wants the general investors to believe as they bail out.)

Makati1 on Thu, 11th Dec 2014 1:43 am 



The EIA keeps throwing cheese on the deck to keep the rats from jumping ship. I enjoy the show these days as the for profit capitalist system is dying under the weight of it’s own hubris.

Kenz300 on Thu, 11th Dec 2014 8:57 am 



High prices = Boom……

Low prices = Bust……

Risky ventures will not be financed……..

synapsid on Thu, 11th Dec 2014 6:24 pm 



Makati,

“The EIA keeps throwing cheese on the deck to keep the rats from jumping ship.”

I’m serving notice that I intend to steal that, M.