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U.S. crude oil production will hit records over the next two years but grow at a slower rate, the U.S. Energy Information Administration said Tuesday.
In its latest Short-Term Energy Outlook, the EIA raised its 2024 U.S. crude production forecast to an average of 13.2M bbl/day, with a further increase to 13.4M bbl/day in 2025, both records, citing increased well efficiency for the expected growth rigs.
While U.S. crude production is forecast to rise by 290K bbl/day this year, growth likely will slow from the 1M bbl/day growth in 2023 due to lower drilling activity, the agency said.
The EIA also sees solar power as the leading source of growth in U.S. electricity generation in both 2024 and 2025, with 36 GW and 43 GW of new solar capacity coming on line, respectively, lifting the solar share of total generation to 6% in 2024 and 7% in 2025, up from 4% in 2023.
The agency also forecast OPEC+ production – excluding Angola, which recently left the cartel – will drop by 620K bbl/day to 36.44M bbl/day next year, down from a five-year average of 40.2M bbl/day before the COVID pandemic.
“Although we expect OPEC+ to restrict production to prevent prices from falling, we still anticipate global production to exceed consumption by mid-2025 and therefore for petroleum inventories to increase,” the EIA wrote.
The oil market discounted the forecasts and moved higher Tuesday, recovering some of the prior session’s sharp losses, with front-month Nymex crude (CL1:COM) for February delivery settling +2.1% to $72.24/bbl and March Brent crude (CO1:COM) closing +1.9% to $77.59/bbl.
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