U.S crude oil production this year will rise faster and demand increases will cool compared to prior expectations, the U.S. Energy Information Administration (EIA) said on Tuesday.
EIA issued the new outlook after the Organization of the Petroleum Exporting Countries (OPEC) and allies extended output cuts through 2024. Saudi Arabia will pare 1 million barrels per day (bpd) from its July output to stabilize oil markets, it said.
The production cuts by the group known as OPEC+ will slightly reduce global oil inventories in each of the next five quarters and boost global oil prices in late-2023 and early-2024, the agency predicted in its Short-Term Energy Outlook.
Brent crude prices will average $79.54 a barrel in 2023, about 1% higher than previously forecast, and U.S. West Texas Intermediate crude prices will average $74.60, a 1.3% increase from EIA’s prior estimate.
U.S. total petroleum consumption will rise only by 100,000 bpd to 20.4 million bpd this year, compared with an estimated gain of 200,000 bpd in the May forecast, it said.
While services and travel should boost gasoline and jet fuel demand growth this year, diesel fuel consumption is set to decline as manufacturing becomes less of a factor in the economy, the agency said.
EIA projects U.S. crude oil production will climb by 720,000 bpd to 12.61 million bpd this year, above a prior forecast calling for a gain of 640,000 bpd.
U.S. oil production gains have slowed due to investor demand for increases in dividends and share buybacks over capital spending. But U.S. output is still set to hit annual production records in 2023 and 2024, EIA said.
(Reporting by Arathy Somasekhar in Houston; editing by Paul Simao)