While the annual projections of crude production by the EIA in the Short Term Energy Outlook often garner all the headline news its often instructive to delve into the numbers ,particularly on a monthly and quarterly basis. In its latest report the EIA projected a 2016 tough in crude production of 8.33 mbd in September or 0.147 mbd from Decembers projected 2016 trough of 8.47 mbd. Significantly this would represent a decline of 1.4 mbd from the April 2014 peak of 9.7 mbd and a reduction of 0.9 mbd from the current level of US production.Looking at the fourth quarter 2016 projected production, the EIA revised DOWN their estimate from Decembers STEO’s number of 8.74 mbd to the new January estimate of 8.49. Furthermore the EIA is looking for the first quarter of 2017 to maintain lower production at 8.5 mbd . The 2017 trough incidentally is projected to be 8.25 mbd also in September. The market of course has been sorely disappointed that US production has not declined more rapidly, but the declines appear as if they will intensify as we move through the second into the third quarter 2016, when US production declines from 8.86 mbd in the second quarter to 8.48 mbd in the third . Expectations of declining US production had been a bullish theme throughout last year. This year the scenario will play out and the EIA is indicating the surprises could be to the downside on output.
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