Has The EIA Been Overestimating Oil Production? – EIA Oil Production - Arhive
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Has The EIA Been Overestimating Oil Production?
The Energy Information Administration is overestimating U.S. crude oil production, Continental Resource’s chief executive Harold Hamm said today in an interview with Fox Business. Hamm was notably the only shale oil major executive who warned against the too-quick boosting of shale oil production after the OPEC-non-OPEC output cut deal from the end of last year.
“EIA over-forecast what U.S. production was going to be this year by about 100 percent,” Hamm said, adding that the EIA has been revising its production estimates down but by a much more moderate rate than the actual decline in production. And 100 percent too much is a fairly large number, and the market was only too happy to see at least a small adjustment, which was made in the EIA’s latest Short Term Energy Outlook (STEO). According to Hamm, the EIA “made an adjustment of 130,000 barrels down” to compensate.
“We are showing about 9.35 million barrels, 9.4 million barrels by the year’s end for the U.S. In comparison their prediction was 9.8-9.9, close to 10 million barrels,” Hamm also told Fox Business’ Maria Bartiromo. The EIA’s September STEO also pegged year-end oil production in the U.S. at 9.3 million bpd, and average 2018 production at 9.8 million bpd.
According to Hamm, the recent improvement in prices was to a large extent caused by the downward revisions of production rates that the EIA has made over the last two months, despite the fact that they were much smaller than they should have been: about half a million bpd, according to Continental’s CEO’s estimate.
That could certainly pressure prices, with market observers increasingly unsure who to believe with regard to production estimates. And Hamm did not stop there. He drove his point home with a punch, saying, “If you look back when Nigeria and Libya brought on an extra 400,000 barrels, the price was hit some 20 percent, it went down $53 to $43, and we feel like that’s about the adjustment that’s due right now.”
By Irina Slav for Oilprice.com