US oil production to fall more than expected this year
US crude oil production will fall more than expected this year, according to the Energy Information Administration (EIA).
The United States will see a drop of an average of 990,000 barrels per day for an average of 11.26 million bpd which is a far greater loss than the agency projected during its previous forecast made in the July Short Term Energy Outlook (STEO).
In July, the EIA had predicted that the US crude oil production would decrease by an average of 620,000 barrels per day for the current year.
That the August STEO “remains subject to heightened levels of uncertainty because mitigation and reopening efforts related to the 2019 novel coronavirus (COVID-19) continue to evolve,” the EIA warned.
The forecast for this month’s STEO was based on macroeconomic assumptions from IHS Markit, which predicts that GDP dropped 5.2% in H1 2020, and will go up from Q3 2020 through 2021.
The STEO expects high crude inventory levels and additional production capacity as a drag on oil prices within the next months besides the reduced outlook for US oil production.
The forecast by the EIA for global liquid fuels production was made at an average 91.8 million barrels per day in Q2—8.6 million bpd less than the same period last year, driven by production quotas for OPEC and reduced US production because of low oil prices.
According to the EIA, however, US production is expected to average 11.14 barrels per day in 2021, a marginal drop than what it was predicted last month. That is as US oil demand next year is likely to rebound by 1.57 million bpd to 20.03 million bpd.
Meanwhile, crude oil prices dipped on Thursday but did not lose all their gains from the previous session after US government data predicted a drop in inventories.
Brent crude fell 8 cents at $45.35 a barrel by 0150 GMT, after a gain of about 2% in the previous session. West Texas Intermediate oil also dropped by 6 cents at $42.61 a barrel after gaining 2.6% on Wednesday.
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