- WTI oil estimated to average $51.31 in 2016, down from $53.57
- Brent crude 2016 price projection reduced to $58.57 a barrel
The Energy Information Administration cut its U.S. crude production outlook for next year as declining prices are prompting shale drillers to put rigs aside. Cheaper gasoline is expected to stoke demand for the motor fuel.
The agency decreased its 2016 forecast by 1 percent to 8.77 million barrels a day, according to its monthly Short-Term Energy Outlook. It boosted its estimate for this year to 9.29 million barrels a day from the 9.25 million predicted last month.
America’s oil drillers have sidelined more than half the country’s rigs since October as prices have tumbled. The number of active oil rigs in the U.S. has fallen by 103 in the past 11 weeks to 572, the least in five years, according to data compiled by Baker Hughes Inc.
"Total oil production from non-OPEC countries is expected to decline next year for the first time since 2008, because of lower oil output in the United States," EIA Administrator Adam Sieminski said in an e-mailed statement.
West Texas Intermediate, the grade traded on the New York Mercantile Exchange, will average $51.31 a barrel in 2016 versus the October projection of $53.57, according to the report. WTI will average $49.88 this year, up from last month’s projection of $49.53.
Brent crude, the benchmark for more than half the world’s oil, is projected to average $56.24 next year, down from the prior estimate of $58.57.
Gasoline at U.S. pumps will average $2.43 a gallon in 2015, up from last month’s estimate of $2.42. Retail prices are projected to drop to $2.33 next year, down from last month’s projection of $2.46.
Low prices that curb drilling are also bolstering U.S. fuel demand, according to the report. American gasoline use is projected to climb 2.1 percent to 9.11 million barrels a day this year. Consumption is projected to rise an additional 0.1 percent in 2016.
"U.S. gasoline demand this year is on track to be the highest since record levels were set in 2007, due in large part to low pump prices and more people working," Sieminski said.