One report this morning indicated that oil may fall as low as US$20 / barrel in 2016. Clearly Katana’s analysts need to attend a Creative Writing course to expand their imaginations, as we can’t get anywhere near that number – even under doomsday scenarios.
Mind you we didn’t expect the oil price to fall below US$38 / barrel so perhaps we really do need to expand our horizons?! But if we put aside the rhetoric and focus on the data for a moment, an interesting fact emerges: US oil Production HAS definitively peaked and is now consistently declining.
The latest weakly production stats from the US Energy Information Administration show that for the week ending the 4th Sept 2015, daily oil production has declined to 9.135m barrels per day. This is some 475,000 barrels per day or 5% below the peak reached three months earlier in the 1st week of June.
With the rig count down another 16 this past week to 848 (versus 1,931 just 12 months ago), it is hard to see this trend doing anything but continuing.
