U.S. crude oil production this year will average 11.1 million bpd and will rise to 11.8 million bpd in 2022, the Energy Information Administration said in its latest Short-Term Energy Outlook - down from its previous forecast.
The agency added that the most recent monthly data on production, from May, showed a daily average of 11.2 million, which the agency expects to remain relatively unchanged until about October when it would start rising. The rise would continue through 2022, according to the EIA.
The U.S. rig count has been on the rise lately, hitting 491 in the first week of August, up by 244 rigs from the same period last year. However, it was much lower than the active rig count in early August 2019, which stood at 790.
While the 2021 output projection is relatively unchanged from last month's edition of the STEO, the 2022 projection shows a smaller increase than previously expected: in July, the EIA forecast 2022 oil output at 12.2 million bpd. Related: Do Lithium Batteries Pose A Major Fire Hazard?
The downward revision probably has to do with rising OPEC production, which the EIA now expects to reach 28.7 million bpd in 2022, from 26.5 million bpd this year with all the production cuts.
This increased production from both OPEC and U.S. production will push international oil prices lower, the EIA noted, forecasting an average 2022 price for Brent of $66 per barrel as "continuing growth in production from OPEC+ and accelerating growth in U.S. tight oil production-along with other supply growth-will outpace decelerating growth in global oil consumption."
Even so, the EIA expects that the global consumption of oil and liquid fuels will increase in 2022, by 3.6 million bpd from this year, to 101.2 million bpd. This year, however, thanks to the rebound in fuel demand, the EIA sees global consumption 5.3 million bpd higher than it was last year.
By Charles Kennedy for Oilprice.com
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Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London