From The Houston Chronicle

U.S. crude oil production will likely average 8.7 billion barrels a day in 2017, about the same as 2016, and China’s demand continues to decline in September by 2.4 percent.

When prices dropped 60 percent between 2014 and early 2016, most analysts believed that U.S. producers would leave the market and take 1 million barrels a day of excess production with them. Turns out, though, that production dropped from 9.4 million barrels a day in 2015 to about 8.8 million this year, according to the U.S. Energy Information Administration. That number will only drop 100,000 barrels a day next year.

Adding to the flood, OPEC is setting new oil production records, hitting 33.54 million barrels per day in October, according to S&P Global Platts Analytics. The cartel may be trying to negotiate a deal to cut production later this year, but members are apparently trying to run up their totals before new production quotas are assigned.

China’s economy, meanwhile, continues to slow. China’s apparent demand for oil was down to 10.85 million barrels a day in September this year compared to 11.12 million barrels a day last year, according to S&P Global Platts Analytics. China’s indigenous crude production was also down from 4.3 million barrels a day to 3.9 million, which helps explain why imports were up 17 percent.

China’s greater reliance on imports may benefit the global oil markets a little, but a slowing Chinese economy is bad news in the long term.

None of this is good news for Houston’s oil exploration and production companies. The EIA now predicts West Texas Intermediate to sell for $49.91 per barrel on average in 2017. That may be enough for oil companies to break even, but that’s not high enough to spur significant new drilling or exploration.

New drilling and exploration is what creates jobs in Houston, and without it, there is little chance of rehiring the 50,000 oil workers who have lost their jobs.


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