RE:RE:James 100% always do your homeworkThese are good points. It's also important to understand that the production numbers published by EIA are estimates. These estimates are not based on rigourous at all and the footnotes on their reports outline this limitation. That is why the production numbers are only ever given in increments or decreases of 100k. They couldn't possibly imply more precision than that.
So sometimes you will see large jumps or drops in the production estimates that will lag a month or two to what has actually been happening on the ground. This is why the rig count is used as a future proxy for change in production. The rig count is very accurate and is a leading indicator of impending increase or decrease in production.
Frac spreads would be an even better data point which would provide closer to real time information about impending production increase.
Bottom line: we should expect production to increase on the EIA reports in the coming weeks, but it's going to take a lot of oil to derail this rally. I don't think the American frackers are going to be able to do it.
JohnnyDoe wrote: BayStreetWolfTO wrote: Don't follow pumpers or bashers look at the data
FYI...yes massive 20%+ increase in rigs from August 2021 to February 2022 see below change in rigs and production impact....
Feb 4th 2022
Lower 48 US production 11.1mbpd
US Oil rig count 497
Versus
August 27th, 2021
Lower US production 11.1 mbpd
US Oil rig count 410
Increase in rig count 21% August 2021 to Feb 2022
Increase in Oil production 0% August 2021 to February 2022
But agreed always do your homework.
what you really need to understand is the rig counts and the frac spread and I'd argue the frac spread is more important. You need the frac spread crews to bring wells on line. All drilling does is it adds to the DUC count. What's more challenging to quantify with data that is available (perhaps it's out there, I haven't found it) is there's high decline rates in shale wells and there are less sweet spot drilling locations. I've read many in the industry say that the primo drill locations have been largely used up. I can't quantify that, but I've read it often enough from industry veterans.
so even with a ton of investment, which isn't really happening at required levels, the shale patch likely isn't able to get output to pre COVID levels and maintain it there. Then you get OPEC. The gap between production and quota continues to widen every month. They raise quota 400 k a day every month. But they aren't seemingly able to raise production by that amount. At 90 dollar oil they are certainly invented to pump to quota levels. The most logical conclusion to me is they can't hit quotas.