Oil: Decline in US crude production has slowed in recent months, rig count rising – NAB

Research Team at NAB, suggests that after a steady decline in the first half of the year, US crude production has stabilised somewhat in recent months as producers responded positively to the rapid oil price recovery over the period.

Key Quotes

“Oil prices are currently around 30% higher than the troughs in January this year. Based on the weekly production data, US crude production averaged around 8.5mb/day in September, from the peak of 9.6mb/day in June last year.

A lift in producers’ optimism is also evident in the rising trend in the rotary rig count in North America since early June. The Baker Hughes rotary rig count has increased by 109 by the end of September since its lowest level of 316 in the last week of May.

While we continue to expect a gradual decline in US production in the coming months due to the lag between the construction of rigs and eventual production from the oil wells, the continuous rise in the rig count suggests that US production may not ease very much more from their current levels unless there is a negative price shock.

The US Energy Information Administration currently forecasts US production to average around 8.51mb/day in 2017, from 8.77mb/d in 2016.”