Will $70 Oil Tempt U.S. Producers To Open The Taps?
U.S. crude oil production is not expected to pick up a significant growth pace at least until the end of this year, the Energy Information Administration (EIA) said in its latest monthly outlook, raising its output forecasts only slightly from last month despite the recent rally in prices. The Short-Term Energy Outlook (STEO) for July shows that the EIA expects American crude oil production to average 11.10 million barrels per day (bpd) in 2021. This is a slight increase of 20,000 bpd compared to EIAs projection for 2021 oil production of 11.08 million bpd in the June STEO. If the current 2021 forecast pans out, American oil production would have dropped by 200,000 bpd compared to the average 2020 output of 11.31 million bpd, which included two months of record-high production that touched 13 million bpd just before markets crashed in March and April 2020. For 2022, the EIA now expects U.S. crude oil production to average 11.85 million bpd, up by 60,000 bpd from Junes forecast of 11.79 million bpd. This is the first upward revision in 2022 forecasts since March this year. Related: Qatar: Peak Natural Gas Demand To Occur Around 2040  Generally, the EIA doesnt see U.S. oil production surging too fast in response to WTI prices at above $70 a barrel. Because changes in rig counts typically lag changes in the WTI price by three to six months and production changes typically occur about two months after rig deployment, current crude oil price levels will not likely affect production until late 2021. We forecast U.S. crude oil production to average about 11.2 million b/d in both 2Q21 and 3Q21 before beginning to rise more steadily, said the EIA. U.S. crude oil production is expected to reach 11.3 million bpd in the fourth quarter of 2021 and further rise to 12.2 million bpd by the fourth quarter of 2022. But it should be noted that the Administration completed its forecasts for the July STEO on July 1, that is, just before the OPEC+ spat threw markets into uncertainty over immediate supply, the future of the production deal, and the alliance itself. By Tsvetana Paraskova for Oilprice.com  More Top Reads From Oilprice.com: