US oil production, which the US Energy Information Administration forecast last month would cross the 14 million b/d threshold in late 2021, is now forecast to peak just above 13.2 million b/d next month and then fall by as much as 660,000 b/d into 2021 as US shale operators struggle with low prices, the agency said Wednesday.
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In its Short-Term Energy Outlook Tuesday, EIA said it now expects US oil output to average 12.99 million b/d in 2020 and 12.66 million b/d, down 210,000 b/d and 900,000 b/d, respectively, from last month's forecast. It would be the first year-on-year fall in US oil output since 2016, EIA said.
The report, traditionally released on Tuesday, was delayed by a day in response to the historic decline in prices which followed the collapse of the OPEC+ production agreement Friday and the ongoing battle for market share between Saudi Arabia and Russia.
EIA now forecasts WTI spot prices to average $38.19/b in 2020 and $50.36/b in 2021, down $17.52/b and $11.67/b, respectively, from last month's forecast. Brent is now forecast to average $43.30/b this year and $55.36/b next year, down $17.95/b and $12.17/b, respectively, from last month's report.
The agency said that its models show oil prices affecting production after a roughly six-month lag, but said US oil output would climb to a record 13.21 million b/d in April, a nearly 1.1 million b/d increase from April 2019, and then begin to decline in May, falling below 13.2 million b/d. By July 2021, US oil output will fall to 12.55 million b/d, the lowest since September 2019.
EIA said it expects US oil production growth in 2020 to take place largely in the Permian. In 2021, however, the Permian is expected to have no growth and the Bakken and Eagle Ford are forecast to have the largest falls.