The EIA seems to be getting a handle US oil production and its prospects for the next 18 months. Part of the improved insight comes from a new data collection program under which the government gets direct reports form oil producers rather than waiting for the information to be filtered through state agencies weeks after the fact. In its Short-Term Energy Outlook released on Wednesday, the EIA says that US oil production peaked at 9.6 million b/d in April and was down by 500,000 b/d to 9.1 million in August.  Production in August fell by 140,000 b/d.
The Administration is now projecting that production will continue to fall into next year rather than rebounding this fall. US production is expected to fall to 8.6 million b/d by August 2016. OPEC is expected to maintain a high level of production so that global supply will remained unchanged at 96.5 million b/d this year ad 97.3 next with more Iranian oil coming into production next year. The EIA also lowered its price forecasts by 1.5 percent saying that US crude will average $53.57 and Brent $58.57 next year.
The new projections pushed the oil markets down by 3.9 percent on Wednesday with NY closing at $44.15 and London at $47.58. Both are about $5 a barrel higher than they were before the late-August price surge.
The state of the Chinese economy remains the focus of attention for the oil markets. The markets got a boost this week after Beijing announced that it would launch a new “more forceful” economic stimulus policy. However, new stimulus measures have been coming out for months without much in the way of obvious results.
Democratic support in the Congress for the Iranian nuclear agreement seems to have reached a critical threshold so that a bill may not make it out of the Senate forcing a Presidential veto. A rebellion by conservative Republicans on Wednesday delayed a vote on the bill in the House and has raised the possibility that an anti-agreement resolution will never make it out of Congress.
Insurgents in Syria have seized a key government airbase in the northwest as reports of increased Russian military presence in Syria have set off a storm of concern. Moscow says the buildup is part of its normal military relationship with the Syrian government which has been going on for the last 50 years but hints that it may take a more active role. The Assad government has been under increasing pressure by rebel forces in recent weeks, suggesting that some sort of change in the country’s governance may be coming soon.
The Kurdish Workers Party in Turkey says it will stop blowing up the pipelines that have been transporting oil from Iraqi Kurdistan and northern Iraq to a Turkish export terminal. More foreign troops are coming into Yemen as anti-Houthi forces prepare for an assault on the capital of Sanaa. Saudi bombing, which is tearing up the country and causing heavy civilian casualties continues.
Gulf Arab oil ministers will meet on Thursday to discuss ways to make oil prices go back up. Moscow has announced that it will not cooperate with the Arab nations by cutting its production.