Crude oil production on track to break 2019 mark, says EIA forecast

Next year could be a record year for U.S. crude oil production, according to the Energy Information Administration’s short-term energy outlook.

The outlook, released on Aug. 9, predicts that U.S. crude oil production will average 11.9 million barrels per day in 2022. By 2023, that number jumps to 12.7 million barrels per day, a 70,000 barrel per day decrease from EIA’s July outlook. However, that forecast would still break the previous mark of 12.3 million barrels per day, which was set in 2019.

Global consumption also is expected to increase, says the outlook. EIA estimates 98.8 million barrels per day of petroleum and liquid fuels were consumed globally in July 2022. An increase of nearly 1 million barrels per day from July 2021. EIA expects that number to increase by 2.1 million barrels per day in 2022 and 2023, for an average of 101.5 million barrels per day by the end of next year.

EIA is forecasting the spot price of Brent crude oil to average $105 per barrel this year and $95 per barrel in 2023.

Diesel prices

According to EIA’s August outlook, the average U.S. retail diesel price per gallon was $5.49. In the third quarter of 2022, EIA predicts that average will fall to $5.02 per gallon. By the fourth quarter of this year, EIA’s forecast calls for an average of $4.39 per gallon of diesel in the U.S.

This is largely the result of low inventory levels due to 93% utilization of U.S. refineries in the third quarter of 2022, due to high wholesale product margins.

The forecast remains subject to the uncertainty of Russia’s invasion of Ukraine, sanctions on Russian oil production, the production desires of OPEC+, the rate at which U.S. oil and natural gas production rise, and other contributing factors.

View the full short-term energy outlook on the EIA website. LL