EIA forecasts record production

The Energy Information Administration released its latest short-term energy outlook, forecasting record average crude oil production in 2023.

“A high level of uncertainty remains in our outlooks, but we have consistently forecast that elevated crude oil prices would help drive record-level annual U.S. oil production levels in 2023,” EIA Administrator Joe DeCarolis said in an EIA news release.

According to the EIA outlook, U.S. crude oil production will average 11.9 million barrels per day in 2022 and 12.8 million barrels per day next year.

Yet, DeCarolis pointed out this production may not yield immediate results in terms of pricing.

“Low global oil inventories coupled with continued high demand for gasoline, diesel, and other petroleum products means that increased production likely won’t have much impact on prices in the short term,” DeCarolis said.

Consumption on the rise

Increased and perhaps record oil production couldn’t come at a better time when you consider EIA estimates on petroleum and liquid fuel consumption.

The outlook said 97.4 million barrels per day were consumed in April 2022, which is an increase of 2.1 million barrels per day from April 2021. EIA expects petroleum and liquid fuel consumption to average 99.6 million barrels per day this year. If so, that would be an increase of 2.2 million barrels per day from the previous year.

By 2023, consumption will increase to 101.5 million barrels per day, according to EIA’s forecast.

Brent crude oil market

In April, the average crude oil spot price was $105 per barrel. That price was down $13 per barrel compared to March. EIA expects crude oil to average $107 per barrel in the second quarter of 2022, and $103 per barrel in the second half of the year. For 2023, EIA is forecasting an average price of $97 per barrel.

However, the forecast remains highly uncertain, EIA said.

These prices depend on how existing sanctions imposed on Russia, any future sanctions or independent corporate actions affect Russian oil production and the sale of Russia’s oil in the global market, according to the EIA outlook.

This outlook was completed prior to any European Union ban on Russian oil imports.

“The bans being reported at the time of writing would likely contribute to tighter oil balances and higher oil prices than our current forecast,” the EIA outlook said. “In addition, the degree to which other oil producers respond to current oil prices and the effects macroeconomic developments might have on global oil demand will be important for oil price formation in the coming months.”

View the full short-term energy outlook here. LL