Continental Resources Chairman Harold Hamm and his executives continue pounding away with their criticism of the federal government estimates of oil production in the U.S.
And what Hamm said in recent interviews is also being analyzed by others who wonder if he is correct in claiming the U.S. Energy Information Administration is distorting oil prices because it’s too optimistic in its forecasts for U.S. production.
Continental Resources senior vice president Blu Hulsey echoed what Hamm had to say in a recent interview at the DUG Midcontinent Conference and Exhibition in Oklahoma City.
“We believe there is an absolute price impact for their over-projection on what EIA is doing,” said Hulsey. He pointed out the EIA over-projected U.S. production by 400,000 barrels a day this year and the over-projection could affect West Texas Intermediate prices by as much as 6 dollars a barrel.
While the August Short-term Energy Outlook was readjusted downward by the EIA to 9.69 MMbbl/d for the September report, Hulsey said the Domestic Energy Producer’s Alliance puts the estimate at 9.35 MMbbl/d by the end of the year.
Hulsey said the original estimate of 9.8 million barrels a day by the EIA was a dramatic jump at the end of the year production forecast.
“We don’t believe we’re going to there,” he said “We’re around a 9.3 million exit rate—that’s a 400,000 barrels per day difference. That’s a huge impact when it comes to WTI prices.”
Hulsey said in the interview that he and CEO Hamm met with the EIA earlier in the year to express their concerns over the projections and the impact on oil prices.
“The EIA will tell you they are not here to move markets, [they] are not here to implement markets, [they] just tell you what they think,” Hulsey said. “We looked and found more than 200 analysts that quote EIA numbers. For somebody that doesn’t move markets, they sure as heck are quoted a lot in the markets.”
Reuters analyst John Kemp’s take on things is that it is not unreasonable for EIA to predict continued growth through year-end for U.S. oil production.
“EIA should not be blamed for price declines which was a necessary market signal to tame the drilling and completion boom and adjust U.S. oil production to a more sustainable course,” wrote Kemp.