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Rodent

EIA ups US production forecast ... AGAIN

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EIA revised today its US production forecast. 11 million bpd by end 2018. WOW. just... WOW.

production week ending 1/26 was 9.919 million bpd. 

When OPEC started it's production cuts of 1.2 million bpd, it was 8.699. 

By my math, it's a wash.

 

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Right, but demand has increased in that timeframe too, so it's not a one-for-one. But it is interesting to think if OPEC hadn't cut, where would US shale production be right now.

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I guess that's true. But what I'm saying is that this perfect storm of low prices (2014ish) is what ultimately allowed US shale to increase production, combined with OPEC's cuts. The low prices thinned the herd, made the ones that were left more cost-conscious. Then when OPEC swooped in to lift prices, shale had already done all the hard work just so it could survive, and it seized the opportunity. Why middle eastern producers cut budgets to compensate for low revenues from low oil prices, US shale cut expenses and operating costs. Middle East breakevens were already pretty low. This combination just leveled the playing field.

But to answer your question, with OPEC's production cuts, I'm guessing the market would have righted itself anyway. It just would have came about in a different way. And probably a bit slower.

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