US oil output to keep prices stable for years: energy secretary

Washington — Record-high US oil output and slowing, but steady economic growth have increased stability in global oil prices, US Energy Secretary Dan Brouillette said Friday.

Brouillette expects oil prices to remain stable for the next two to three years.

"For the near term, based on what we see in the marketplace, what we see around the world, I think we're looking at very, very stable pricing," he said during an appearance at the Atlantic Council.

Brouillette said growing US oil output, which the US Energy Information Administration forecasts will climb from an average of 12.24 million b/d in 2019 to 13.3 million b/d in 2020, has blunted the impact of multiple supply shocks, including sanctions on crude exports out of Venezuela and Iran, and last year's attacks on Saudi oil infrastructure.

"The fact that we are able to produce 13 million b/d here in the United States, and some estimates I have seen informally go as high as 15 or 16 million b/d, that extra capacity, that strength, if you will, in the marketplace, I think keeps oil prices stable for the next two to three years," he said.

Since the Abqaiq attacks on September 14, Brent spot prices have averaged $63.28/b, with daily settlements as low as $54/b and as high as $70.25/b, a $16.25/b range, according to EIA data.

That range is more stable than Brent spot prices over the same, nearly five-month stretch from mid-September 2018 to early February 2019, when prices averaged $67.86/b, but ranged from as low as $50.57/b to as high as $86.07/b, a $35.50/b range, the data shows.

Comparing Brent spot prices over the same five-month stretch going back mid-September 2010 shows settlements in considerably smaller ranges than the $16.25/b range seen since Abqaiq last year.

Over the past 10 years, Brent spot prices have settled in a range below that in five years, with prices averaging both above and below prices seen over the past five months.

For example, from mid-September 2013 through early February 2014, Brent prices settled between $103.08/b and $113.27/b, a $10.19/b range, showing a significantly higher, but arguably more stable trading price range.

From mid-September to early February 2017, Brent prices settled between $41.61/b and $55.94/b, a $14.33/b range, showing a lower, but somewhat stable trading price range.

Mid-September 2014 to early February 2015 saw the most volatile price swing, from $45.13/b to $97.39/b, a $52.16/b range.

EIA forecasts Brent to average $64.83/b in 2020, up 47 cents/b from 2019, and then $67.53/b in 2021.