EIA cuts forecast for US crude oil production by 50,000 barrels per day

The Energy Information Administration (EIA) prediction for crude oil production for 2023 in the United States has been lowered by 50,000 barrels per day. This reduction is attributed to the extension of output cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies through 2024.

The report predicts that crude oil production in the United States will increase by 670,000 barrels per day (bpd) to reach 12.56 million bpd by the end of this year. However, this figure is lower than the previous forecast of 720,000 bpd. This change in forecast is indicative of the impact of OPEC+ output cuts on the global oil market and highlights the importance of monitoring global oil production trends and market dynamics.

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The cuts made by OPEC+ were anticipated to lower global oil inventories over the next five quarters and ultimately push oil prices up in late 2023 and early 2024. The U.S.  witnessed an unexpected increase in crude inventories by 5.9 million barrels to 458 million barrels for the week ending on July 7, contradicting analysts' predictions of a one-million-barrel draw. As a result, the EIA has revised its estimates, forecasting that Brent crude oil spot prices will average at USD 78 per barrel throughout July, while crude oil prices will reach USD 80 per barrel in the fourth quarter of 2023.  This shift in forecasts has already caused a 2 percent increase in Brent futures, which rose to USD 79.34 per barrel on Tuesday.

As per International Energy Agency (IEA), the latter half of 2023 will witness a tight oil market. This is primarily due to the robust demand for oil from China and other developing countries. Additionally, there will be supply cuts by both Saudi Arabia and Russia. Meanwhile, the Secretary General of OPEC has also predicted an increase in global oil demand in the future.

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According to Procurement Resource, the EIA has revised its projections for U.S. crude oil output in 2023, reducing it by 50,000 barrels per day. The reason for this revision is the extension of output cuts by OPEC+ through 2024. As a consequence of this decrease in output, the EIA anticipates a surge in oil prices during the fourth quarter of 2023. This increase in prices is expected to be driven by the rising demand for oil from developing countries, especially China.