Production Problems "The oil price continues a rebound as production problems start to plague the United States. The Energy Information Administration (EIA)reported yesterday that US oil production plunged by over 100,000 barrels a day, mainly because of the shutdown by Tropical Storm Cindy but it came at a time when US production was already struggling to meet lofty expectations set earlier in the month. While production will snap back next week, the truth is that we will not hit the 120,000-barrel production increase that was expected by the market this month and it could also mean the US hit a short-term production peak as well-head economics for oil make it more likely that drilled oil wells will not be brought to completion.
The price collapse in oil will hurt the prospects for US shale output. When most everyone was thinking just a few weeks ago that shale oil production was invincible, the warning signs are coming fast and furious that it might not be the case. It just goes to show that when everyone is thinking the same thing, then it is obvious that some people are not thinking. In fact, the oil market seemed to bottom when we dipped into so called bear market territory and we saw a rash of downgrades to energy companies and reports of a swift drop in capital especially when it comes to shale oil projects. The price shake out slowed the speculative fever that was being built up by shale oil producers and hot money that stayed too focused on production growth instead of making money. Like I said before, you can’t lose money on every barrel of oil and expect to make up for it in volume."
https://blog.pricegroup.com/2017/06/29/production-problems-the-energy-report-062917/