The U.S. government sees nationwide oil production jumping above 11 million barrels a day much quicker than anticipated.
After oil output already topped 10 million barrels a day back in November, output will climb above the 11 million mark this November, the Energy Information Administration said in its monthly Short-Term Energy Outlook on Feb. 6.
It previously forecast production above that level in November 2019.
Nationwide output will average 10.59 million this year and 11.18 million next year, up from prior forecasts of 10.27 million and 10.85 million, according to the EIA.
With West Texas Intermediate crude holding above $60 a barrel since late last year, the prospect of pumping in this price environment is seen enticing drillers to pick up the pace. The U.S. oil rig count posted the biggest two-week gain since June, according to the latest Baker Hughes data.
WTI crude will average $58.28 a barrel this year, the EIA said, up from last month’s estimate of $55.33, and $57.51 in 2019, higher than $57.43. The global benchmark Brent is forecast to average $62.39 in 2018, up from $59.74, and $61.51 in 2019 versus $61.43. WTI traded at $63.59 at 1:50 p.m. in New York, while Brent was at $66.91.
“EIA’s forecast expects Brent crude oil prices to be in the $62 per barrel range in 2018 and 2019. That’s down a bit from current levels, as strong U.S. production growth is expected to help moderate global prices,” Dr. Linda Capuano, administrator of the U.S. Energy Information Administration, said in a statement.
The EIA increased its estimates for global production and demand in 2018. Output is seen at 100.43 million barrels a day, up from 100.34 million previously, with demand at 100.23 million, compared with 100.11 million. For 2019, world supply is seen at 102.17 million and demand at 101.95 million.
The EIA painted a rosy picture for crude in its 2018 annual forecast released Feb. 6.
The agency projects that continued shale development and low demand will transform the U.S. into a net energy exporter by 2022 and a net petroleum exporter by 2029.
Crude output growth will be driven by Texas’s Permian Basin, with gains in the Dakotas and Rocky Mountain region. Meanwhile, production in Gulf Coast region will flatten out after 2025, as drilling in the Eagle Ford becomes less productive.
By 2050, EIA projects that Brent will reach $114 a barrel in 2017 dollars, with prices rising faster in the short-term because of weak near-term investment and stronger demand.