Cargo Trends Affirm Falling Oil Production

Submitted by Nilofar Saidi via OilPrice.com,

Waterborne shipments of crude and condensate have been heading in one direction since the beginning of the shale revolution: up. That statement is no longer true. Nearly halfway through the month, and September loadings are more than 200,000 barrels per day lower than during the same period last year.

All Waterborne Loadings (source: ClipperData)

Waterborne volume is the last to be added and the first to be cut. A drop in domestic waterborne volume is the first firm indication of lower production, because the waterborne barrel is the hardest and most expensive one to move.

According to the EIA, U.S. production peaked in April at 9.6mn bpd, which coincides with the peak in shipped volume at 1.8mn bpd. Since then, shipments have slid slowly, but the drop became precipitous this summer and is gathering momentum.

There has also been a sharp slowdown in crude-by-rail traffic, evident in the volumes reaching the Mississippi River and the rail-to-barge terminals on the coasts. Pipeline volume is likely the most resilient, but judging by September’s waterborne numbers, is also likely to be lower.

The full extent of the decline in shipments has been obscured by the explosive growth in condensate exports, which flattered this year’s numbers.

As ClipperData has been reporting since June, condensate exports have now slowed, also highlighting the extent of the drop in liquid hydrocarbon production and shipment. The volume decrease, especially in the Gulf, points to further downward revisions in the EIA production numbers, especially since the decrease is happening in West Texas.

A hint of this came yesterday afternoon. In its Drilling Productivity Report, EIA shows for the second month in a row that production is projected to grow in October in only one of the shale plays– the Permian Basin. On a year-over-year basis, only the Permian is now projected to be higher:

(source: EIA)

Comments

[LawsofPhysics]

LOL!!!  Who needs oil, long live "mark to fantasy" and the unicorns shitting skittles eCONomy!!!!

[venturen]

with so many tankers parked full of oil...tough to ship. It is getting harded to hid the glut!

[LawsofPhysics]

Sure, but then one must wonder if there really is a glut, why is the U.S.S.A still importing so much?  What happended to our "shale miracle"?

someone is lying, and I am shocked, just shocked I tell you!

[venturen]

you need to look at the export of refined products we are net exports if you look at product waste from refining

[LawsofPhysics]

Sure, but as you demonstrate, we have plenty of (now surplus) oil to refine. Stop importing so much, fuck em.

[TheDanimal]

Pretty sure the oil we're getting via fracking is lighter, some refined products have got to require heavier oil to produce.  If I remember correctly from chemistry it would seem that the heavier oil would have more of the longer hydrocarbon chains.  

[TheDanimal]

Pretty sure the oil we're getting via fracking is lighter, some refined products have got to require heavier oil to produce.  If I remember correctly from chemistry it would seem that the heavier oil would have more of the longer hydrocarbon chains.  

[KansasCrude]

Bullshit we are NOT NET EXPORTING.... We are still  importing  over 8 million barrels a day of Oil and Gasoline.  I can tell how many of you watch the morons on FOX News.  Like Bill O Rielly who spews these lies.

http://ir.eia.gov/wpsr/wpsrsummary.pdf

Please show me the data showing we are exporting over 8 MILLION barrels per day.......

[jimcg]

During the '07-'09 bust, when oil prices dumped to about $17, several large investment banks, Morgan, Goldman, Citi, chartered supertankers to store oil until the price recovery....it did, they did.

Wash, rinse, repeat.

J

[FlacoGee]

I must have been so high on crack that I did not notice the drop to $17.

Are you referring to pricing in this reality or in some alternate reality?

Oil dumped to $44 in 2009.   2007 to 2008 was between $62 and $144 and closed out at $46.

Please let me know which reality/planet where you saw this drop to $17.

[jimcg]

Misread the chart, $16.42 on Dec. '98. Just the same the point was the concept, not the price. Sarcasm noted, but not necessary.

j

[Grandad Grumps]

My cargo cult is pretty oily.

[venturen]

What happen to Cushing running out of space...they built supply all summer. They just now call it "other" instead of "crude", never mind the tanks just parked ... the totals built all summer and previous winter and previous fall...etc http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WTTSTUS1&f=W

[LawsofPhysics]

time to stop importing then.  "problem' solved.

[Youri Carma]

Algo's not convinced (yet), oil went down.

[Magnum]

The Peak Oil religious cult gets a shot in the arm.

[Omen IV]

I wonder if anyone knows the per well  / per day average for wells drilled in the last 36 months only - by month ?

[scatha]

What's happening is exactly what cool head predicted as early as last year.

The barrel oil could  reach $10 or $20 even if all fracking collapses causing epidemic of apoplexy amongst empty talking heads. For one good reason since very few acknowledge the true reason for oil price collapse. I mean the true reason, which was repeatedly stated by Saudis, Russians and Chinese. All of them say this is the demand collapse stupid. And demand collapses because of rampant inequality in societies throughout the world since people are loosing income, paying off the ever-increasing debt and cut the investments and expenses to the bone or desperately engage in gambling on stocks and loose big time.

That's why Saudis are trying to suppress fracking and tar sands not to completely lose influence on the US and World market and their benchmarks after they lost Chinese and Indian market to Russians and Iran as a part of trade dedollarization efforts which is exemplified by opening the first Chinese oil market denominated in Yuan just now and that includes Saudis’ participation and further collapse of petrodollar. After next step, which would be development of Chinese investment banks to provide margin loans for oil contracts and we will kiss petrodollar dominance bye bye.

As far as fracking itself is concerned, the industry is extremely over-leveraged, massively loosing money as we speak regardless of any technological improvements. We see this desperation with unsound mining practices technically maximizing production over existing rigs, shortening their longevity to pay bondholders and survive another day. As soon as interest rates normalize (if ever) or banks will not be able to sell their junk bonds (it’s already happens), they all will go bankrupt if Saudis keep the price low and they will for their own survival. We are just waiting for all the $90 hedges to expire and that’s will be it or another massive FED bailout, this time it would be junk bond holders since their market is dead now.

As a result of geopolitical tension between US and Russia, Saudis are step by step moving towards accommodation with the eastern powers to balance Iran support by Russia and China. 

Just recently the number two sheik, defense minister of Saudi Arabia is in S. Petersburg, Russia talking about energy and military cooperation and perhaps purchasing weapons. It is clear political shift indicating much more independent new monarch who rebuked Obama just few weeks ago and without clearance from Washington attacked Iranian interests in Yemen. Saudis even substantially reduced purchasing of US treasuries while China is selling en mass, a historical development challenging of petrodollar. Saudis even started selling bonds to cover budget deficit due to their currency peg which will break soon as in China mostly due to war spending and invasion of Yemen, since one cannot wage a war without freely printing money.

One way or another with big oil companies abandonment of the projects, the future of the shale industry is bleak and probably will be with marginal importance in the US. Already fracking has been almost abandoned in Europe since nobody want to challenge Saudis.

The interesting and so far correct take on the so-called shale revolution  posted nine months ago I found at:

https://sostratusworks.wordpress.com/2015/01/15/the-shale-game/

[MSimon]

Shale puts a cap on oil.

The next Venezuela will be....

[emersonreturn]

thank you, scatha, impressive link