A Very Important Update On US Oil Production

EIA reported June US oil production today under its new methodology. The latest PSM included a line item called, "transfers to crude oil supply." 

For those unfamiliar with why the EIA incorporated this change, it was because the adjustment factor (or some people called it the fudge factor) was getting ever larger leading to more confusion than clarity.

From our standpoint, the adjustment was just supply that we weren't aware of, so this latest reporting format dramatically enhances the clarity of EIA monthly data.

Now first thing is first, EIA reported that US oil production came in at 12.844 million b/d for June. But if you notice the line items, you will see that the adjustment came in at -200k b/d. Transfers to crude oil came in at 634k b/d. Using the old methodology, the adjustment would have been +434k b/d.

The nice thing about this update is that the crude oil production side gets more clarity. Now granted, we suspect that it is most likely going to overestimate US crude oil production, but that's why we have the adjustment factor. 

The old methodology of deriving US oil production was always to use the formula (production + adjustment). The reason is that the EIA 914 was never able to fully capture all of the production that was out there. This new format captures the quantity that's being transferred into the crude supply (i.e. blending), but this likely overstated actual production.

As a result, US oil production for June really came in at 12.644 million b/d (12.844 - 0.2).