There Is Way Too Much Misinformation On US Oil Production

Thanks to the EIA's new quest of eliminating the adjustment factor, people are now completely misunderstanding US oil production.

In EIA's latest weekly oil storage report, it re-benchmarked US weekly oil production higher by ~300k b/d. For those of you who are unfamiliar with the re-benchmarking method, the weekly US oil production figure is derived from EIA's short-term energy outlook report or STEO. The STEO figures are derived from a combination of real data (EIA 914/monthly supply) and EIA's own estimate.

But at the start of the year, the new EIA administrator, following months of scrutiny on the unexplainable elevated adjustment figure, decided to embark on a study to identify why the adjustment is so high. During this study period, it found that "transfers to crude oil" and under-reported US crude production were factors that contributed to elevated adjustment.

From what we've seen so far in the monthly reports, roughly 500k b/d to 600k b/d are attributed to "transfers to crude oil", while the remainder was attributed to under-reported production.

Taking all this into account, our methodology of always using the adjustment to calculate real supply in the US was unchanged by this methodology change from the EIA. 

You can see this in our oil production matrix.

Now you will notice that blue-dotted line going straight up. That's the EIA attempting to explain away the ridiculous weekly adjustment figure.