Oil production in December 2015 down 166 MBOPD from a year earlier
The decline in crude oil prices took longer to pull production down than many expected, but it is happening, according to data from the EIA. Crude oil production in December 2015 averaged 9.3 MMBOPD, down 166,000 barrels from December 2014. The decline in December oil production represents the first time in four years that production has seen a year-over-year decline.
Production reached a 44-year peak of almost 9.7 MMBOPD in April 2015, but even as production rolled over, it remained above levels seen in 2014. Most of the decline has occurred in states where a large portion of the output comes from tight oil formations, including North Dakota, Texas, and New Mexico. Tight oil was responsible for the large increases in U.S. production over the last five years.
The U.S. rig count has continued a steady decline since November of 2014, with Baker Hughes (ticker: BHI) reporting the eleventh consecutive week of declines last week. In the week ended March 4, 2015, the total U.S. rig count fell below 500 to 489, just one rig above the lowest point recorded by Baker Hughes in 1999.
Prices climbing back toward $40 per barrel
Crude oil prices have been staging a recover this week as rumors of an OPEC price floor. Many are concerned that improving prices may bring back another wave of tight oil production, but these fears are likely overstated, said Continental Resources (ticker: CLR, ContRes.com) Vice President of Crude Logistics and Hedging Kirk Kinnear.
Brent crude oil went above $40 per barrel for the first time in 2016 on March 7 following the price floor rumors. Prices have continued to push higher, with Brent at $40.90 today, and U.S. crude benchmark WTI up over a dollar at $38.22 at 3:00 p.m. EST.
