(MENAFN) US crude oil production is expected to increase at a faster pace this year, while the growth in demand is anticipated to cool down compared to previous estimates, according to the US Energy Information Administration (EIA). The EIA revised its outlook following the decision by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) to extend output cuts through 2024.
As a result of OPEC+'s move, the EIA predicts a slight reduction in global oil inventories over the next five quarters, leading to an increase in global oil prices in late 2023 and early 2024, as stated in its Short-Term Energy Outlook. The agency now forecasts that Brent crude prices will average USD79.54 per barrel in 2023, representing a 1 percent increase from the previous forecast. Similarly, US West Texas Intermediate crude prices are expected to average USD74.60 per barrel, reflecting a 1.3 percent increase from the EIA's prior estimate.
In terms of petroleum consumption, the EIA projects a more modest growth rate for the United States. Total petroleum consumption in the country is expected to rise by only 100,000 barrels per day (bpd) to 20.4 million bpd in 2023. This figure is lower than the estimated gain of 200,000 bpd projected in the May forecast. The agency attributes this adjustment to a decline in diesel fuel consumption due to manufacturing playing a smaller role in the economy. However, gasoline and jet fuel demand growth is anticipated to be supported by services and travel sectors.
Despite the focus on shareholder returns and reduced capital spending, the EIA anticipates that US crude oil production will still experience growth. The agency forecasts a climb of 720,000 bpd to reach 12.61 million bpd in 2023, surpassing its previous estimate of a 640,000 bpd increase. The EIA notes that while the pace of production gains has slowed, the US is still on track to achieve annual production records in 2023 and 2024.
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