A Very Important Update On US Oil Production (Part 2)
EIA published its latest monthly US oil production data last Friday and the figure surprised everyone. July US oil production came in at ~12.991 million b/d.
Source: EIA
For those of you who read part 1, none of this should be a surprise. We gave EIA kudos for trying to fix the persistent issue of elevated adjustment and they are doing precisely that. The problem, however, is that EIA is late to the party, and everyone who has been modeling the US inventory balance knows to include an adjustment factor when computing total supplies.
For example, here is our track record in estimating total crude supplies from the US.
As you can see, July figures were slightly elevated, but the overall directional difference is the same. And what's particularly interesting about this is that although more supply is now being attributed to US crude production, total supplies are about the same, and they've been about the same since March this year.
Here is our high-frequency production tracker and as you can see, there's been no noticeable pick up in US crude production. If it was really the case that we are vastly off on US oil production, you would have noticed by now in the repeated misses we would report for our US crude storage forecast. Luckily, we've been very good, and so that implies that our US oil production figure is not too far off.