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In its latest Short-Term Energy Outlook (STEO), published this month, the EIA revised up its forecast of U.S. crude oil production by 30,000 bpd, or by 0.2 percent, from the October STEO.
Forecasts for next year’s production are increased by 119,000 bpd, or by 0.9 percent, compared to the projections in the October outlook.
One of the reasons for the EIA’s increased forecasts is the fact that it raised its estimate of crude oil prices. The EIA revised up its forecast of WTI Crude prices by $2 a barrel to $56 in November, and by $1 per barrel in both December and January to $55 and $54 a barrel, respectively.
The slight rise in crude oil prices also prompted the EIA to increase its production forecast for the first half of 2020 because of its assumption of a six-month lag between a change in prices and a production response.
The November STEO sees U.S. crude oil production at 12.29 million bpd this year and at 13.29 million bpd next year. The Permian will continue to be the key driver of production growth, the EIA says, expecting the basin’s production to grow by 915,000 bpd in 2019 and by another 809,000 bpd in 2020.
The Permian will be the key driver of U.S. shale production, which the EIA expects to rise by 49,000 bpd in December to a record-high average of 9.133 million bpd.
However, production growth will slow down and the rig count will continue to drop, as EIA sees WTI prices at Cushing to remain below $55 a barrel until August next year.
In light of the persistently weak oil prices, producers are expected to cut capital spending, which will lead to “notable slowing in the growth of domestic crude oil production over the next 14 months,” EIA said.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.