U.S. Oil Output to Hit a Record in 2018by
EIA lowers 2017 WTI price forecast to $50.68 from $52.24
Brent crude 2017 price projection revised down 3% to $52.60
U.S. crude production forecasts keep growing.
The Energy Information Administration said domestic output will climb to a record 9.96 million barrels a day in 2018, up from 9.9 million barrels projected last month, according to the agency’s monthly Short-Term Energy Outlook released Tuesday. Production will average 9.31 million barrels a day in 2017, up from 9.22 million projected in April.
U.S. explorers have added rigs this year, partially undermining oil-production cuts that started in January by the Organization of Petroleum Exporting Countries and 11 other exporters. The nation’s active oil-rig count has more than doubled in the past year to 703 last week, according to Baker Hughes Inc. The lag between drilling and reaching maximum production signals that output will climb further in coming months, according to the report.
"We’re only starting to see the shale rebound reflected in supply," John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by telephone. "The production gains so far this year have mostly come from offshore platforms in the Gulf of Mexico. Production is going to rise further in the months ahead because of shale."
World oil production is projected to rise faster than demand this year and in 2018. The EIA increased its forecast for global production to 98.47 million barrels a day, from 98.03 million last month. Production is projected to rise to 100.4 million barrels a day in 2018.
Global oil demand will rise to 98.3 million barrels a day this year, from 98.09 million in January’s outlook. Consumption will increase to 99.93 million barrels a day in 2018, up from 99.55 projected a month ago.
“Increased drilling-rig activity is expected to boost U.S. crude oil production this year and next,” EIA Acting Administrator Howard Gruenspecht said in an emailed statement. “Higher oil production from the United States, along with rising oil output from Canada and Brazil, is expected to curb upward pressure on global oil prices through the end of 2018.”
West Texas Intermediate crude will average $50.68 a barrel in 2017 versus the April projection of $52.24, according to the report. Prices are forecast to climb to $55.10 next year, which is unchanged from last month’s estimate.
Brent crude, the benchmark for more than half the world’s oil, is projected to average $52.60 this year, a decrease from the prior estimate of $54.23.