Crude oil production in the United States could fall by about 2 million bpd from current estimates of daily averages, according to the Energy Information Administration.
In its latest Short-Term Energy Outlook, the authority said that the average for this year could be around 11.8 million bpd, which compares with weekly estimates of 13 million bpd currently. The revised 2020 number is half a million barrels daily lower than the average for 2019, the EIA noted in its report. Yet production will likely continue to decline next year as well, according to the EIA, by a higher margin of 700,000 bpd.
These numbers suggest that the EIA expects a prolonged fallout from the coronavirus outbreak and the oil price war that has added weight to an already out-of-balance oil market.
“The private sector and the free market are driving those cuts,” the Department of Energy said in a comment of the report, as quoted by Reuters.
“Today’s EIA Short Term Energy Outlooks (STEO) projects that growth has been stalled due to the unexpected and unprecedented worldwide demand impacts of COVID-19 coupled with the disruptive actions of the ongoing dispute between OPEC + nations,” DoE spokeswoman Shaylyn Hynes said. “The Secretary is confident that both of these forces are temporary, and the market will recover.”
Meanwhile, OPEC and Russia have signaled that any new production cut deal would have to involve the U.S. along with other world producers. In response to this, the DoE said: “With regards to media reports that OPEC+ will require the United States to make cuts in order to come to an agreement: The EIA report today demonstrates that there are already projected cuts of 2 (million bpd), without any intervention from the federal government.”
By Irina Slav for Oilprice.com
More Top Reads from Oilprice.com:
- The Oil Price Crash Won’t Stop The Tesla Boom
- Premium: Oil Market Data Is About To Get Very Ugly
- Premium: Oil To Move Above $41 If Trump’s Tweet Is True
