NEW YORK- U.S. crude oil production is expected to fall by 860,000 barrels per day (bpd) in 2020 to 11.39 million bpd, the U.S. Energy Information Administration (EIA) said on Tuesday, a bigger decline than its previous forecast for a drop of 800,000 bpd.
U.S. crude oil production has recovered from the two-and-a-half-year lows touched in May mainly because shale producers have brought wells back online in response to rising prices.
However, the EIA expects U.S. crude oil production to generally decline to an average of 11 million bpd in the second quarter of 2021 because new drilling activity will not generate enough production to offset declines from existing wells. It expects drilling activity to rise later in 2021, reaching an average of about 11.3 million bpd in the fourth quarter.
Overall, U.S. crude output in 2021 is expected to fall by 290,000 bpd to 11.1 million bpd, compared with the EIA’s previous forecast for a decline of 360,000 bpd.The statistical arm of the Department of Energy now expects U.S. petroleum and other liquid fuel consumption to decline 2.38 million bpd to 18.16 million bpd in 2020, a slightly bigger decline than its previous forecast for a drop of 2.31 million bpd.
Oil prices have whipsawed in recent days as optimism from promising results for a COVID-19 vaccine has offset bearish sentiment due to rising coronavirus infections and renewed lockdowns in many countries.
Globally, the EIA forecasts that consumption of petroleum and liquid fuels will average 92.9 million bpd for all of 2020, down by 8.6 million bpd from 2019, before increasing by 5.9 million bpd in 2021.
The EIA expects that as global oil demand rises, forecast inventory draws in 2021 will cause some upward oil price pressures and forecasts international Brent crude oil prices LCOc1 will average about $47 a barrel in 2021.