EIA Forecast U.S. Crude Oil Production and Global Inventories Higher

In the December STEO, EIA estimate U.S. crude oil production will average 11.87 million barrels per day (b/d) in 2022. This is up from 11.83Mbpd in the prior forecast. The EIA forecasts 12.33 million b/d in 2023, up from 12.31mbpd which would set a record for most U.S. crude oil production in a year. The current record is 12.3mbpd, set in 2019.

EIA forecast OPEC crude oil production will fall in November and December. On October 5, 2022, OPEC+ producers agreed to reduce crude oil production targets by 2.0 million barrels per day (b/d) from their previously stated targets beginning in November 2022.

STEO Oil Highlights

  • EIA forecast global oil inventories to fall by 0.2 million barrels per day (b/d) in the first half of 2023 (1H23) before rising by almost 0.7 million b/d in 2H23. This forecast leaves global oil inventories higher at the end of 2023 than forecast in the November STEO, which results in there Brent crude oil price forecast averaging $92 per barrel (b) in 2023, $3/b less than we had forecast last month.
  • EIA estimate for U.S. crude oil production will average 11.87 million barrels per day (b/d) in 2022. This is up from 11.83Mbpd in the prior forecast.
  • The EIA forecasts 12.33 million b/d in 2023, down from 12.31mbpd which would set a record for most U.S. crude oil production in a year.

Global Oil Production

  • The U.S. Department of the Treasury issued General License (GL) 41 at the end of November, allowing Chevron to resume oil production in Venezuela for export to the United States. This issuance introduces additional uncertainty related to our oil production forecast for Venezuela.
  • Chevron’s ability to increase production will depend on the state of production facilities, which have yet to be evaluated. We have raised our outlook for Venezuela’s production starting in 1Q23.
  • The impact of the recent OPEC decision to reduce crude oil production and whether there will be further production cuts in the future
  • The threat of increasing conflict following the outbreak of violent clashes in the Libyan capital of Tripoli
  • Uncertainty around the potential expiration of the current coordinated petroleum release from strategic reserves in November
  • The potential return to an Iran nuclear deal that could lift sanctions on the country and allow Iran’s crude oil exports into the market

Forecast depends heavily on future production decisions by OPEC+, the responsiveness of U.S. tight oil production to oil prices, and the pace of oil demand growth, among other factors.

Top 5 Crude Oil Producing Countries Prior To Russian Invasion of Ukraine

Source: EIA

From The TradersCommunity Desk