EIA forecasts record-level US crude oil production through 2019

The U.S. Energy Information Administration (EIA) recently released its January Short-Term Energy Outlook (STEO), which forecasts record-level U.S. crude oil production, mostly consisting of flat crude oil prices and global inventory increases, through 2019.

Crude oil production is forecasted to increase more in the United States than in any other country. Crude oil production from the United States is expected to increase more than in any other country. U.S. crude oil production is predicted to average 10.3 million barrels per day (b/d) in 2018, the highest annual average production in U.S. history. U.S. crude oil production is expected to continue growing in 2019 to an average of 10.8 million b/d.

EIA forecasts Brent crude oil to average $60 per barrel in 2018 and $61/b in 2019, slightly above the $54/b average in 2017. The STEO forecasts the West Texas Intermediate (WTI) crude oil spot price will be slightly lower than Brent prices, averaging $55/b in 2018 and $57/b in 2019. The price difference is expected to narrow from the $6/b average price difference of the fourth quarter of 2017 due to increased oil transport capabilities.

The implied global stock change, the difference between total world consumption and total world production, is estimated to have averaged 0.4 million barrels per day (b/d) in 2017, marking the first year of global inventory draws since 2013. EIA forecasts that global inventories will increase by about 0.2 million b/d in 2018 and by about 0.3 million b/d in 2019.

Crude oil production from the Organization of the Petroleum Exporting Countries (OPEC) averaged 32.5 million b/d in 2017, a decline of 0.2 million b/d from 2016. This is mainly due to a November 2016 agreement that aimed to limit OPEC crude oil output to 32.5 million b/d, EIA said. OPEC crude oil production is expected to increase by 0.2 million b/d in 2018 and by an additional 0.3 million b/d in 2019 as it begins to return to pre-agreement levels.

EIA expects total global crude oil production to be slightly greater than global consumption in 2018 and 2019. Global consumption of petroleum and other liquid fuels increased by 1.4 million b/d in 2017, reaching an average of 98.4 million b/d for the year.

EIA forecasted that consumption growth would average 1.7 million b/d in 2018 and 1.6 million b/d in 2019. Consumption growth in countries outside of the Organization for Economic Cooperation and Development (OECD) is expected to account for 1.2 million b/d and 1.3 million b/d of the growth in 2018 and 2019, respectively.