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U.S. oil production will grow even more than the government previously expected as a scorching price rally drives producers to boost drilling.
Oil output will average 12.6 million barrels a day in 2023, an increase from its previous estimate of 12.41 million, according to Energy Information Administration data. The current annual all-time high of 12.3 million barrels a day was set in 2019. This year’s production forecast also was revised higher to 11.97 million barrels a day from an earlier projection of 11.8 million, EIA said in its monthly Short-Term Energy Outlook report.
This extra U.S. supply is a welcome boon for President Joe Biden, who has asked suppliers to raise production to help tamp down energy prices that are contributing to the highest inflation in decades. In the wake of oil prices surging to their highest since 2014, two of the largest U.S. oil companies announced they would increase production by double digits in the Permian Basin, America’s most prolific oil patch.
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Prices have rallied with supplies consistently falling short of demand surging around the globe as economies recover from pandemic-era slowdowns. Global consumption is set to reach 100.6 million barrels a day this year, a higher revision from the last estimate of 100.52 million, according to the report. Consumption is expected to rise to 102.5 million barrels a day next year.
The agency raised its price forecasts for benchmark crudes West Texas Intermediate and Brent this year by around $8 a barrel, thought it does expect oil’s rally to cool as more supplies come online. “We expect downward price pressures will emerge in the middle of the year as growth in oil production from OPEC+, the United States, and other non-OPEC countries outpaces slowing growth in global oil consumption.”
Global petroleum supply is expected to rise to 101.39 million barrels a day this year. That is an upward revision from last month’s forecast of 101.05 million. EIA expects global production will rise to 103.47 million barrels a day next year.