IEA predicts stronger US oil production growth

In its latest Short-Term Energy Outlook (STEO), the US Energy Information Administration (EIA) has upgraded its predictions for US crude oil production.

The organisation had predicted in its previous STEO that including lease condensate, US crude oil production would stand at 13.65 million barrels per day (bpd) this year and 14.10 million bpd next year. The latest report upgrades this to 13.7 million bpd and 14.15 million bpd, respectively. Figures from the IEA reveal that the US has never before averaged more than 14 million bpd, neither monthly nor annually.

It was previously anticipated that production would plateau in line with falling oil prices as OPEC+ wound down its production cuts. Instead, the IEA says the West Texas Intermediate (WTI) spot price will rise from last year’s average of $65.40 per barrel to a predicted $88.32 this year. This has motivated majors like ExxonMobil, the maker of Mobil DTE hydraulic oil, and smaller operators to continue upping their production.

It is also not just oil production that is increasing, as according to the EIA:

“Rising crude oil prices drive crude oil production higher in our forecast, which results in growth in associated natural gas production. However, rising natural gas demand next year for electricity generation and ongoing growth in US natural gas exports put upward pressure on natural gas prices in the second half of (2H27).”

It therefore expects the Henry Hub spot price, which is measured in dollars per million British thermal units, to rise more than previously forecast by 2.8% and 9% for this year and next year, respectively.

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