In its latest Short-Term Energy Outlook, the US Energy Information Administration (EIA) has slightly revised the expected growth of oil production in the US.
The EIA had previously expected US oil production to total 13.42 million barrels per day (bpd) this year, but it has now revised it down to 13.37 million bpd. It left next year’s forecast unchanged, also at 13.37 million bpd. While this year is still expected to set a new record, the forecasts suggest that US crude oil production is plateauing – at least, for now.
Oil prices have remained below $70 despite ongoing geopolitical tensions in the Middle East due to economic uncertainty and production increases from the OPEC+ group. The EIA reports that low prices have caused US producers to scale back their drilling and completion activity in response. Indeed, some operators can struggle to break even at lower crude prices.
In contrast, big shale players like ExxonMobil, the maker of the Mobil Pegasus gas engine oil, can take advantage of large asset portfolios and economies of scale.
The EIA did revise up its expectations for oil prices this year, however:
“The Brent crude oil price in our forecast averages $69 per barrel this year, which is $3/b higher than in last month’s Short-Term Energy Outlook, which was released just before the conflict over Iran’s nuclear program escalated in mid-June.”
The relief for oil producers will be short-lived, however, with the EIA expecting builds in oil inventories to push crude oil prices back to an average of $58 next year.
