EIA cuts 370,000 b/d from 2020 US oil output forecast to 11.26 mil b/d

Washington — The US Energy Information Administration Aug. 11 slashed its 2020 forecast for US oil production by 370,000 b/d from last month's outlook to 11.26 million b/d based on more extensive curtailments than it previously estimated.

EIA raised its 2021 outlook for US production by 130,000 b/d to an average 11.14 million b/d, with production rising slowly but steadily to end the year at 11.5 million b/d.

US oil production for both years would remain below the 2019 average of 12.25 million b/d.

The forecast assumes Energy Transfer's 570,000 b/d Dakota Access Pipeline will continue operating after an appeals court overturned a district judge's order to shut the system by Aug. 5.

EIA raised its outlook for global oil demand by 250,000 b/d from last month's forecast to 93.14 million b/d for 2020 and by 280,000 b/d to 100.16 million b/d for 2021. Both would fall well below the 2019 global oil demand of 101.25 million b/d.

"Global petroleum demand continued to recover in July, but continued growth in global coronavirus cases could bring renewed lockdown measures and presents considerable uncertainty to global oil demand for the remainder of the year," the report said.

US gasoline demand is expected to rise to 9.16 million b/d in August, the highest monthly average since November, EIA said. The demand would first exceed year-ago levels by March 2021 at 9.14 million b/d.

EIA expects diesel to have a slower recovery through 2021, with jet fuel demand languishing even more.

High global inventories and surplus crude production capacity are expected to keep a lid on prices in the coming months, but declining stock levels will lift prices into 2021, the report said.

EIA raised its crude price outlook less than $1/b for 2020 averages but trimmed its 2021 forecast by 17 cents/b.

It now expects WTI crude prices to average $38.50/b in 2020 and $45.53/b in 2021, with Brent averaging $41.42/b in 2020 and $49.53/b in 2021.

US reverts to net oil importer

The US has reverted to a net oil importer since May as weak global demand lowered US refined product exports. EIA expects the US to remain a net oil importer — with its total crude and refined product imports exceeding total imports — through 2021, with the exception of a few months of very small net export levels.

However, the US remains a net exporter of refined oil products, with net exports growing to 5.3 million b/d by December 2021, compared with 3.6 million b/d in December 2021.

US crude imports, which had been on the decline before the pandemic and US shale collapse, are expected to rise to 5.2 million b/d by December 2021, compared with 3.2 million b/d in December 2019.