U.S. crude oil production is not expected to pick up a significant growth pace at least until the end of this year, the Energy Information Administration (EIA) said in its latest monthly outlook, raising its output forecasts only slightly from last month despite the recent rally in prices.
The Short-Term Energy Outlook (STEO) for July shows that the EIA expects American crude oil production to average 11.10 million barrels per day (bpd) in 2021. This is a slight increase of 20,000 bpd compared to EIA’s projection for 2021 oil production of 11.08 million bpd in the June STEO.
If the current 2021 forecast pans out, American oil production would have dropped by 200,000 bpd compared to the average 2020 output of 11.31 million bpd, which included two months of record-high production that touched 13 million bpd just before markets crashed in March and April 2020.
For 2022, the EIA now expects U.S. crude oil production to average 11.85 million bpd, up by 60,000 bpd from June’s forecast of 11.79 million bpd.
This is the first upward revision in 2022 forecasts since March this year. Related: Qatar: Peak Natural Gas Demand To Occur Around 2040
Generally, the EIA doesn’t see U.S. oil production surging too fast in response to WTI prices at above $70 a barrel.
“Because changes in rig counts typically lag changes in the WTI price by three to six months and production changes typically occur about two months after rig deployment, current crude oil price levels will not likely affect production until late 2021. We forecast U.S. crude oil production to average about 11.2 million b/d in both 2Q21 and 3Q21 before beginning to rise more steadily,” said the EIA.
U.S. crude oil production is expected to reach 11.3 million bpd in the fourth quarter of 2021 and further rise to 12.2 million bpd by the fourth quarter of 2022.
But it should be noted that the Administration completed its forecasts for the July STEO on July 1, that is, just before the OPEC+ spat threw markets into uncertainty over immediate supply, the future of the production deal, and the alliance itself.
By Tsvetana Paraskova for Oilprice.com
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They should continue to heed the wise advice of the shale oil veteran Harold Hamm ‘not to drill themselves into oblivion.
Even if they wanted, shale oil drillers can only lift their production very slightly. Moreover, they know that their fate is in the hands of OPEC+. If they revert to the bad old habits of reckless production, OPEC+ will pursue a market share strategy causing oil prices to decline far below the breakeven price for the majority of the drillers and bringing them back to the brink of collapse.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
Nice up day for Peabody Coal ($btu) in a down market today anyways. The US economy appears to be slowing down in a dramatic way as interest rates start plunging at the long end. Plus borrowing costs are at record lows and Wall Street is coming off all time closing highs so absolutely any producer on Earth but of course US producers want this price realized and in fact are getting the current price.
I think *the real question* is whether or not demand given pure battery power exists in the USA for oil and respective distillates exist at this price. A good proxy is of course the price of Canadian crude oil which is far less expensive than the US grades.
Not really sure what the price is for Venezuela crude or distilled product let alone all product out of Columbia.
That too pressures US producers.
Certainly US oil Companies are getting hit hard today.