Idle Rambling On US Crude Oil Production -- March 3, 2016

The best thing for me personally about blogging is that I finally have a feeling for US oil industry. I miss a lot, I misread a lot, I don't understand a lot, but at the end of the day, I've gained a better perspective on the Bakken revolution.

Right now, these two tweets are hitting social media:

• Rising oil prices supported by falling US output, which EIA says lost 25,000 b/d last week to 9.077 million
• US crude oil production for week ended February 26, 2016, was down 247,000 b/d year-over-year

As usual, in that second soundbite we got the numerator but not the denominator. In the first tweet, we got the denominator, but not the percent, or what 25,000 bopd really meant; no context.

For the record, 25,000 is 0.27% of 9 million.

For the record, 247,00 is 2.5% of 10 million.

Of course US production will continue to drop, and perhaps it will drop significantly. There are suggestions that North Dakota's January, 2016, crude oil production will drop to 850,000 bopd -- which, if accurate, and it very well could be -- would be staggering.

Of course US production will continue to drop but what is surprising is how slowly that drop has occurred. It will be interesting to see where the bottom in US oil production occurs.

We are  also seeing two other data points most of us did not understand a year ago:

• the importance of understanding the difference between light oil and heavy oil
• the reason the US continues to import Saudi oil when there is a glut of US oil

But the more interesting data point is that US shale is likely to be profitable/economical at $40 WTI but $40 WTI does very little to help Saudi Arabia or Russia.