The US government slightly raised its estimate for domestic crude output next year after five months of downward revisions.
Production will average 12.34mn b/d in 2023, up from last month's forecast of 12.31mn b/d, the Energy Information Administration (EIA) said today in its December Short-Term Energy Outlook (STEO). Output in 2023 will just surpass the record 12.32mn b/d set in 2019, the year before the Covid-19 pandemic struck.
Future output forecasts have been drastically scaled back over the course of the year, as concerns have mounted over inventories, financial constraints after a series of busts in the past decade, and inflation. Shale producers that are under pressure from their shareholders to focus on boosting returns instead of production, and have struggled to recruit skilled workers after hefty job cuts during previous downturns.
"That's kind of given Opec a lot of comfort to come in and try to keep prices elevated," Francisco Blanch, head of commodities and derivatives research at Bank of America, said in relation to shale's lackluster performance. "They don't fear — as they may have done in the past — the competition from shale oil."
The EIA expects US crude output this year to average 11.87mn b/d, up from 11.83mn b/d forecast last month.
West Texas Intermediate (WTI) crude spot prices are expected to average $95.22/bl this year, down from the EIA's prediction last month of $95.88/bl.
The EIA expects WTI prices in 2023 will average $86.36/bl, lower than the $89.33/bl predicted last month.
