The Current State Of 'Murrica

The weekly EIA data is out. The US added a two and a half million barrels to storage this past week. The markets saw that, did their thing and panicked. But let’s look at the numbers that really matter. The weekly field production numbers. After a huge 150K BPD spike in production last week, this week was a 50K drop. An almost 800k BPD drop from this time last year. And a 671k BPD decrease from the beginning of the year.
As much of a drop as this appears, it can get a lot worse. Since the beginning of the year four large oil platforms came online in the Gulf Of Mexico. Those were in the works for years and were funded back before the crash. They have boosted Gulf oil significantly. So the decline is being caused by the onshore fields. While rig counts are ticking up, and well efficiency is at its highest levels, there is only so much that can be done at $50 oil. Already the Eagle Ridge And Bakken shale formations are being abandoned. While there is still a huge amount of oil in those fields, most of it is not profitable to drill at these prices. All of the new US drilling is happening in the Permian basin in Texas. These wells are allegedly profitable at $40-$45 dollars. So at current oil process, they have to be just scraping by. The US will start running out of these cheap Permian deposits soon, and unless oil starts creeping back up to the seventy dollar range, drilling in the US will start tapering off again.