In its latest Short-Term Energy Outlook, the US Energy Information Administration (EIA) has increased its expectations for US crude oil production for this year and next year while also paring back its predicted increase in demand.
The new outlook takes into consideration Saudi Arabia’s recent decision to voluntarily decrease its production by a million barrels per day (bpd) in July, as well as the OPEC+ group’s wider decision to maintain its current production cuts into next year. This will be partially offset by US crude oil production from US producers like Chevron and ExxonMobil, the producers of Texaco and Mobil grease and lubricant products, rising by 720,000 bpd to 12.6 million bpd this year and 12.8 bpd next year, compared to the previously expected 12.5 million and 12.7 million, respectively.
Nevertheless, the EIA still predicts that the next five quarters will see slight falls in global oil inventories, adding:
“We expect these draws will put some upward pressure on crude oil prices, notably in late-2023 and early-2024. We forecast the Brent crude oil spot price will average $79 per barrel (b) in the second half of 2023 (2H23) and $84/b in 2024.”
The EIA has revised down its assumed GDP growth for the US economy from 1.6% this year and 1.8% next year to 1.3% and 1.0%. This in turn has consequences for its predictions for US petroleum consumption, which the EIA now expects will grow by half the previously estimated 200,000 bpd, with the post-pandemic recovery in travel driving the growth.
