Using a new survey that seeks production data directly from drillers, the U.S. Energy Information Administration determined that domestic oil output was not as strong as the agency previously thought.
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The EIA on Monday lowered its assessment of U.S. crude production by 40,000 and 130,000 barrels a day for each of the first five months of 2015. Texas production was revised sharply lower, while oil supplies coming from the Gulf of Mexico were greater than prior estimates.
More revisions could be on the horizon because the EIA is still working to validate new estimates for Oklahoma and West Virginia.
The August report, which tallies production totals through June, is the first to use data provided directly by companies. The EIA previously used information submitted to state agencies. According to the EIA, its company surveys represent more than 90% of oil production in the U.S.
“Domestic oil production has grown rapidly in recent years. More recently, with major changes in oil prices over the past year, policymakers and markets are closely watching how domestic production responds. These new data series provide a better way to assess production trends,” EIA officials wrote in a blog post Monday.
The expanded survey revealed that drillers pumped 9.3 million barrels of oil a day in June, which is the slowest clip since January and a decline of 100,000 barrels a day versus May.
Overall, production during the first half of the year averaged 9.4 million barrels a day, and output peaked at 9.6 million barrels a day in April. The EIA’s initial high-mark estimate was 9.7 million barrels a day in March.
The federal report offered a sign that broad spending cuts by U.S. producers have, in fact, eased the flow of oil.
Oil prices have plunged more than half from their highs in 2014, largely due to concerns over an abundance of supply. Companies including Exxon Mobil (NYSE:XOM) slashed their 2015 budgets, and the global industry eliminated around 150,000 jobs to counter waning prices. Smaller firms that drill for shale oil, a more expensive process, were hit especially hard.
Yet U.S. oil production, even from shale plays like North Dakota’s Bakken, continued to move at a swift pace. Investors retreated further from oil, pushing Nymex West Texas Intermediate crude below $40 a barrel earlier in August.
Nymex WTI futures surged $3.98, or 8.8%, to $48.85 a barrel on Monday, wiping away August’s declines and completing the largest three-day percentage gain since August 1990. Brent crude, the international benchmark, was up 7.8% at $55.71 a barrel.
The market also got a lift after the Organization of the Petroleum Exporting Countries said it would consider talking to outside producers. OPEC has maintained its own production levels since the oil slump began a year ago. Many analysts considered the oil cartel’s decision surprising.
While the EIA’s latest report shows that oil producers have closed the spigots a bit during the first half, a weekly report from Baker Hughes (NYSE:BHI) indicated that the number of oil rigs operating in the U.S. has ticked higher over the last six weeks.
Also, crude output in June was still 7.1% higher year-over-year with Texas and North Dakota posting increases of roughly 10%.