EIA Forecasts U.S. Crude Oil Production of 70,000 bpd Lower in 2022 but Record for 2023

In the September STEO, EIA estimate for U.S. crude oil production will average 11.79 million barrels per day (b/d) in 2022. This is up 540kbpd this year but down from +610k in the August forecast. The EIA forecasts 12.63 million b/d in 2023, which would set a record for most U.S. crude oil production in a year. The current record is 12.3 million b/d, set in 2019.

STEO Highlights

  • Estimate EIA STEO Current Yr Crude Forecast (Bpd) Sep: 11.79M (prev 11.86M)
  • Estimate Forward Yr Crude Forecast (Bpd): 12.63M (prev 12.70M)
  • Current Yr Dry natural gas Forecast (Bcf/d): 97.09 (prev 96.59)
  • Fwrd Yr Dry Natural gas Forecast (Bcf/d): 100.36 (prev 100.02)

The August Short-Term Energy Outlook (STEO) is subject to heightened uncertainty resulting from Russia’s full-scale invasion of Ukraine, how sanctions affect Russia’s oil production, the production decisions of OPEC+, the rate at which U.S. oil and natural gas production rises, and other contributing factors. Less robust economic activity in our forecast could result in lower-than-forecast energy consumption.

  • EIA forecast the Brent crude oil spot price in our forecast averages $98 per barrel (b) in the fourth quarter of 2022 (4Q22) and $97/b in 2023.
  • The possibility of petroleum supply disruptions and slower-than-expected crude oil production growth continues to create the potential for higher oil prices, while the possibility of slower-than-forecast economic growth creates the potential for lower prices.
  • U.S. crude oil production in the EIA forecast averages 11.8 million barrels per day (b/d) in 2022 and 12.6 million b/d in 2023, which would set a record for the most U.S. crude oil production during a year. The current record is 12.3 million b/d, set in 2019.
  • The EIA estimate that 99.4 million b/d of petroleum and liquid fuels was consumed globally in August 2022, up by 1.6 million b/d from August 2021.
  • The EIA forecast that global consumption will rise by an average of 2.1 million b/d for all of 2022 and by an average of 2.0 million b/d in 2023.
  • As a result of high natural gas prices globally, the EIA increased their forecast for oil consumption in 4Q22 and 1Q23 as electricity providers, particularly in Europe, may switch to oil-based generating fuels.
  • The EIA expect retail gasoline prices will average $3.60 per gallon (gal) in 4Q22 and $3.61/gal in 2023. Retail diesel prices in our forecast average $4.90/gal in 4Q22 and $4.28/gal in 2023.

Global Oil Production

EIA estimate that crude oil prices will generally remain near August average levels through the end of 2023. Although we expect average crude oil prices to mostly remain between $90/b–$100/b through next year, the possibility for significant volatility around those averages is high.

EIA cites recent events contributing to increased uncertainty in the crude oil market and in our forecast include:

  • The impact of the recent OPEC decision to reduce crude oil production by 0.1 million b/d in October 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
  • The risk of hurricanes that could result in potential production outages and limited export traffic along the U.S. Gulf Coast


The front-month to third-month crude oil futures price spread (1-3 spread) is a measure of market backwardation, a market environment that encourages crude oil to flow out of inventories and into the market. Backwardation occurs when crude oil futures contract prices in the near term are higher than crude oil prices in the long term.

In response to Russia’s full-scale invasion of Ukraine in the spring, the 1-3 spread for Brent increased from an average of $1/b in January to nearly $7/b in March. Following a decline in April, it returned to near $7/b levels in July. In August, the spread narrowed to $3/b, the narrowest spread since April. The decrease in backwardation in August suggests that the market call to draw oil from inventories has decreased since midsummer, indicating market conditions that are more balanced between supply and demand than earlier this year.

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