The U.S. Energy Information Administration slightly increased its crude oil price outlook through 2020, citing favorable economic data and a decision by OPEC and its partners to cut crude oil production by an additional 500,000 barrels per day.

In its latest "Short-Term Energy Outlook," the EIA projected that West Texas Intermediate spot crude oil prices will decline from an average of $65.06 per barrel in 2018 to $56.74/bbl in 2019 before averaging $55.01/bbl in 2020. The 2019 and 2020 projections are up 0.5% and 0.7%, respectively, from the prior forecast.

In 2018, Brent crude oil averaged $71.19/bbl. The EIA expects the global benchmark price to decline to $63.93/bbl in 2019, up 0.5% from the prior forecast, before sliding to $60.51/bbl in 2020, up 0.7% from the prior forecast.

The EIA noted that front-month West Texas Intermediate and Brent crude oil prices increased by $2.23/bbl and $1.70/bbl, respectively, from Nov. 1 through Dec. 5, reflecting "modest upward pressures from both demand-side and supply-side factors."

"On the demand side, economic data from the world's two largest economies — the United States and China — reduced perceptions of an upcoming slowdown in economic activity," the EIA said. "On the supply side ... expectations that OPEC and its partners would extend or possibly deepen [production] cuts ... helped support crude oil prices."

The cartel announced an agreement Dec. 6 to cut production by an additional 500,000 barrels per day through March 2020. Analysts expect the supply cuts to boost prices through the first quarter of 2020, but they noted a failure to extend the cuts beyond the first quarter, and the specter of an increase in Saudi Arabia's oil output threatens to undermine oil prices over the course of the full year.

The EIA said U.S. crude oil production averaged a record 10.99 million barrels per day in 2018 as December 2018 production reached 11.96 million bbl/d, the highest level in U.S. history. The EIA forecast that U.S. crude oil production will average 12.25 million bbl/d in 2019 and 13.18 million bbl/d in 2020, with most of the growth coming from the Permian Basin.

During 2018, West Texas Intermediate traded at an average $6.13/bbl discount to Brent. The government expects the average discount to widen to $7.19/bbl in 2019 before narrowing to $5.50/bbl in 2020.