Kemp: US Oil Production Is Probably Peaking Right Now

Kemp: US Oil Production Is Probably Peaking Right Now
US crude production will peak this month, according to revised forecasts published by the country's EIA.

Reuters

John Kemp is a Reuters market analyst. The views expressed are his own

LONDON, April 8 (Reuters) - U.S. crude production will peak this month, according to revised forecasts published by the country's Energy Information Administration (EIA).

Output will average 9.37 million barrels per day (bpd) in April and the same in May before falling to 9.33 million bpd in June and 9.04 million bpd by September, the EIA predicted in the April edition of its Short-Term Energy Outlook (STEO).

Production is expected to peak a month earlier and 10,000 bpd lower than the EIA forecast in the January STEO, reflecting continued low wellhead prices and a sharper-than-expected slowdown in new well drilling.

Production is forecast not to exceed this month's level for another 18 months. The EIA has cut its forecast for the end of 2016 by 230,000 bpd compared with three months ago (http://link.reuters.com/ped54w).

While the EIA's Brent price forecast is largely unchanged, prices for West Texas Intermediate crude have been marked down through the rest of 2015 and 2016, reflecting the build-up of crude stocks and persistent weakness of U.S. grades.

The number of rigs drilling for oil has fallen further and faster than was anticipated last year. Baker Hughes reported there were 802 rigs drilling for oil last week, down exactly 50 percent since early October.


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