The U.S. government reduced its crude production estimates by as much as 130,000 barrels a day for the first five months of the year based on results of a new survey.
The United States produced about 9.4 million barrels of crude a day during the first half of the year, according to the Energy Information Administration’s website. That’s on average about 87,000 barrels a day lower than previously estimated, with March output getting the largest cut of 130,000. June production was 9.3 million, the lowest since January.
The revisions mean global crude supply and demand could rebalance faster than previously thought, said Phil Verleger, president of the economic consulting company PKVerleger. Crude prices are down more than 50 percent from their peak in 2014 as supply has outpaced demand, causing producers to fill storage tanks with the excess.
“Two words: Glut gone,” Verleger said by phone from Carbondale, Colorado. “If you extrapolate their production revisions over their forecasts, between that and the increase in gasoline consumption, the market should be back in balance early to middle of next year.”
The EIA numbers were followed by an Organization of Petroleum Exporting Countries report saying the group is ready to talk to other producers to achieve ‘fair prices.’
West Texas Intermediate rose as much as $4.08 to $49.30 on Monday, the highest intraday level since the end of July.
The new numbers come from direct surveys of energy companies in the 15 states that make up the bulk of U.S. energy production. Previously, the EIA based its estimates on formulas applied to older tax information and other state data that lagged months behind. The method was less accurate in states with rapid changes in production growth.
The biggest revision is in Texas, where output was 100,000 to 150,000 barrels a day less than previously reported, the Energy Information Administration said.
“Domestic oil production has grown rapidly in recent years,” the EIA said on its website. “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.”