U.S. crude output is set to fall by 670,000 barrels per day (bpd) in 2020 to 11.56 million bpd, the U.S. Energy Information Administration (EIA) said on Tuesday, steeper than the 540,000 bpd decline it forecast previously as drillers have slashed activity.
The agency now expects U.S. petroleum and other liquid fuel consumption to plunge 2.4 million bpd to 18.06 million bpd in 2020 compared with its previous forecast for a drop of 2.19 million bpd.
Oil prices collapsed this year as the coronavirus pandemic slammed global demand and restricted travel across the world.
The EIA said 2020 world oil consumption is expected to plummet by 8.30 million bpd to 92.53 million bpd, a sharper slide than the 8.15 million bpd previously forecast.
However, demand across the world has started to edge higher with countries easing lockdowns and stay-at-home orders.
“Initial data show the global oil market rebalancing faster than EIA previously forecast,” EIA Administrator Linda Capuano said in a statement.
“We expect (global oil) inventories to begin drawing in June, as a result of sharper declines in global oil production during June and greater global oil demand than previously expected.”
The Organization of the Petroleum Exporting Countries, Russia and other producers agreed in April to cut supply by 9.7 million bpd. The group agreed on Saturday to sustain those cuts, equal to about 10% of global supply, through July.
Producers across North America have also slashed output and U.S. rig counts have fallen to a record low.
The EIA expects U.S. crude oil production will continue to decline, to 10.6 million bpd in March 2021, then increase slightly through the end of 2021.
U.S. oil demand is expected to rise 1.4 million bpd to 19.46 million in 2021 compared with the EIA’s previous forecast for a rise of 1.45 million bpd.