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The Energy Information Administration has estimated that U.S. crude oil production isn’t going to see much of a rebound for the rest of the year, according to the latest Short Term Energy Outlook published on Wednesday.
According to the most recent data, U.S. crude oil production averaged 11.3 million bpd in June. And the EIA sees U.S production remaining near that level through the end of 2021.
After that, the EIA sees production climbing to 11.7 million bpd next year “driven by growth in onshore tight oil production.”
The bulk of this tight oil growth is expected to come from operators who will start to add rigs, which should more than offset production decline rates.
Further, the EIA predicts—amid a clear caveat of much pandemic uncertainty—that global oil production growth will outpace the slowing growth in global oil demand, thus putting downward pressure on the price of a Brent barrel to an annual average of $66 next year.
These figures are based on U.S. GDP growth of 6% this year and 4.4% next year.
Brent crude was trading at $72.70 per barrel on Wednesday afternoon, up $1.01 per barrel, or 1.41% on the day. This is up from just over $50 per barrel at the start of the year.
For its August report, the EIA estimated that U.S. crude oil production would fall to an average of 11.12 million bpd this year—160,000 bpd shy of 2020 levels. It was a more positive outlook than it had in the month prior.
Given the double-digit price bump that crude prices have received this year, some were expecting U.S. shale drillers to add rigs and pump their way out of higher prices.
But cost discipline has so far reigned supreme in the U.S. oil industry, and current signs—and pandemic fears--point to continued restraint.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.