The Organization of the Petroleum Exporting Countries (OPEC) and allies extended output cuts through 2024, prompting EIA to release the new outlook.
Contrary to earlier projections, the US Energy Information Administration (EIA) reported on Tuesday that US crude oil production will increase this year more quickly and demand growth will slow down.
The Organization of the Petroleum Exporting Countries (OPEC) and allies extended output cuts through 2024, prompting EIA to release the new outlook. To balance oil markets, Saudi Arabia said it would reduce its production by 1 million barrels per day (bpd) from July.
According to the agency’s Short-Term Energy Outlook, the OPEC+ production cuts will result in a slight decline in global oil inventories each of the ensuing five quarters and a rise in oil prices in late 2023 and early 2024.
U.S. West Texas Intermediate crude prices will average $74.60 in 2023, up 1.3% from the previous EIA estimate, and Brent crude prices will average $79.54 a barrel, about 1% higher than anticipated.
According to the report, the total amount of petroleum consumed in the US will only increase by 100,000 bpd to 20.4 million bpd this year, as opposed to the May forecast’s estimated gain of 200,000 bpd.
While services and travel should increase demand for petrol and jet fuel this year, the agency predicted that diesel fuel consumption will decrease as manufacturing becomes less important to the economy.
This year, U.S. crude oil production is expected to increase by 720,000 bpd to 12.61 million bpd, exceeding the previous prediction of a gain of 640,000 bpd.
The increase in U.S. oil production has slowed because investors prefer dividend increases and share buybacks to capital expenditures. However, according to EIA, US output is still expected to set new annual production records in 2023 and 2024.
The U.S. Energy Information Administration (EIA) is a key agency of the U.S. Federal Statistical System that collects, analyzes, and disseminates data on energy. It covers coal, oil, gas, electricity, renewable energy, and nuclear energy, and is part of the U.S. Department of Energy.