Both the price and production of crude oil are expected to increase during the rest of 2019 and 2020 in the US.
The Energy Information Administration (EIA) has revised its figures, with crude oil production forecast to increase by 30,000 barrels per day (bpd) or 0.2% from its October short term energy outlook (STEO).
Production in 2020 is also forecast to rise by 119,000 bpd or by 0.9%, compared to the projections in the October outlook.
One of the reasons for the increased forecasts is its estimated rise in crude oil prices.
The EIA projects crude oil prices to increase by $2 (£1.6) a barrel to $56 (£44) in November and by $1 per barrel in both December and January to $55 (£43) and $54 (£42) a barrel, respectively.
With these changes, the EIA now forecasts US crude oil production to increase to 12.3 million bpd in 2019, from 11 million bpd last year.
It states: “Although EIA forecasts that overall US crude oil production will continue to increase, EIA expects the growth rate will slow largely because of a decline in oil-directed rigs. According to Baker Hughes, active rig counts fell from 877 oil-directed rigs in the beginning of January 2019 to 674 rigs in mid-November, a 23% decline. Rig counts in the Permian region fell 15% during this period, from 487 to 408 rigs.
“Although US rig counts are declining, improvements in rig efficiency, which allows fewer rigs to drill the same number of wells, partially offsets declining rig counts. In addition, higher initial production from wells (although not necessarily the total estimated ultimate recovery) is offsetting some of the slowdown in rig counts.”