STEO highlights: US oil output growth to slow to 410,000 b/d by 2021: EIA

Washington — US oil production growth will slow to 1.06 million b/d this year and drop further to 410,000 b/d in 2021 as rig counts remain low, but efficiency and well-level productivity both continue to rise, the US Energy Information Administration said Tuesday.

EIA estimates US oil production averaging 13.3 million b/d in 2020 and 13.71 million b/d in 2021, it said in its first Short-Term Energy Outlook with 2021 predictions.

US production growth has dropped steadily from the staggering 1.64 million b/d year-on-year increase seen in 2018.

EIA expects US oil output to top 13 million b/d for the first time this month and cross 14 million b/d in November 2021.

High production and declining import reliance will make the US a net oil exporter for the first time on an annual basis this year, with total exports of crude and refined products exceeding imports by 840,000 b/d, EIA said. Net petroleum exports will rise to 1.4 million b/d in 2020.

US net crude imports are expected to fall to 2.91 million b/d by 2021, while net refined product exports will rise to 4.31 million b/d.

PRICES

• * EIA estimates Brent oil prices will average $64.83/b in 2020 and $67.53/b in 2021, up from $64.36/b in 2019.

• * WTI light sweet crude will average $59.25/b in 2020 and $62.03/b in 2021, EIA forecasts, up from $57.02/b in 2019.

• * EIA Administrator Linda Capuano said a number of risk factors — including supply disruptions and the pace of global economic growth — could push Brent prices out of the expected $60-$70/b range through 2021. "With global oil inventories forecast to build during the first half of 2020, some downward oil price pressures could emerge in the coming months, although geopolitical risks could limit downward price movements," she said.

• * Implementation of the International Maritime Organization's 0.5% sulfur cap will cause wholesale diesel margins to peak in March at 53 cents/gal, compared with the 2019 average of 43 cents/gal, EIA said. It sees diesel margins averaging 50 cents/gal in 2020 and 49 cents/gal in 2020.

• * EIA sees relatively flat US retail gasoline prices, averaging $2.63/gal in both 2020 and 2021, compared with $2.60/b in 2019.

SUPPLY

• * EIA expects both global oil supply and demand to rise in 2020, with supply from non-OPEC producers — particularly the US, Norway, Brazil, and Canada — more than offsetting lower production from OPEC members.

• * Global inventories will expand 300,000 b/d in 2020 as supply increases by 1.6 million b/d while demand rises by 1.3 million b/d, EIA said.

• * OPEC crude oil output, which averaged 29.79 million b/d in 2019, is forecast to drop by 600,000 b/d in 2020, to 29.19 million b/d, due to output cuts, Iran sanctions, and ongoing supply declines in Venezuela, EIA said. EIA forecasts OPEC output will rise to 29.28 million b/d in 2021.

• * OPEC, Russia, and nine other countries agreed last month to deepen their cuts to 1.7 million b/d — of which OPEC would shoulder 1.2 million b/d — from January to March. EIA expects the alliance to limit production all through 2020 because of rising oil inventories.

• * OPEC produced 29.29 million b/d of crude in December, down 250,000 b/d from November, EIA said. The latest S&P Global Platts OPEC forecast pegged OPEC output at 29.55 million b/d in December.

• * EIA forecast Saudi crude output at 9.75 million b/d in December, down 150,000 b/d from November, and Iraq output at 4.55 million b/d last month, down 100,000 b/d from November. Platts forecast Saudi output at 9.82 million b/d and Iraq output at 4.58 million b/d in December.

• * In December, Venezuelan oil output averaged 700,000 b/d and Iranian output averaged 2 million b/d, both unchanged from November, EIA said.

• * OPEC spare crude oil production capacity, which averaged 1.23 million b/d in September is forecast to climb to nearly 1.4 million b/d over the course of 2020.

• While still a steep decline from its recent spare production capacity peak of nearly 6.8 million b/d in April 2002, OPEC spare capacity is forecast to average 2.62 million b/d in October 2020, its highest monthly spare capacity average since March 2013.

• * OPEC spare production capacity, which averaged 1.98 million b/d in 2019, is forecast to climb to 2.44 million b/d in 2020 and to 2.49 million b/d in 2021.