EIA Lowered US Crude-Oil Production Forecast

EIA (Energy Information Administration) on Tuesday lowered both its 2017 and 2018 US crude-oil production forecast figures to reflect, as Hurricanes Harvey and Irma continued to impact demand for both crude and oil products in the US. The statistical arm of the Department of Energy lowered its growth forecast to 400,000 barrels per day to 9.25 million bpd. Last month, it expected a 500,000-bpd increase to 9.35 million bpd. According to the EIA’s monthly short-term energy outlook, US crude oil production in 2018 will rise by more than previously expected.

Hurricane Harvey’s most significant effect on petroleum markets was to curtail refinery operations in Texas. Refinery operations are largely dependent on a supply of crude oil and feedstocks, electricity, workforce availability and safe working conditions, and outlets for production. As a result of Hurricane Harvey, many refineries in the region either reduced runs or shut down in its aftermath. “Industry watchers across the sector will have to grapple with uncertainty regarding the timeline for the return to normal operations for critical energy infrastructure, including refineries, in the coming weeks and months,” EIA Acting Administrator John Conti said in a statement.

US regular gasoline retail prices reached $2.69 per gallon (gal) on September 11, up 29 cents/gal from August 28 and the highest weekly average since August 2015. EIA forecasts the average U.S. regular gasoline retail price to be $2.61/gal in September and then fall to $2.40/gal in October, which are 25 cents/gal and 10 cents/gal higher, respectively, than projected in the August STEO. EIA forecasts the regular gasoline retail price to fall to $2.23/gal in December. North Sea Brent crude oil spot prices averaged $52 per barrel (b) in August. EIA forecasts Brent spot prices to average $51/b in 2017 and $52/b in 2018. West Texas Intermediate (WTI) average crude oil prices are forecast to be about $2/b lower than Brent prices in both 2017 and 2018.

Many oil production platforms in the Gulf of Mexico had returned to operation, and EIA forecasts overall US crude oil production will continue to grow in the coming months. EIA forecasts total US crude oil production to average 9.3 million b/d for all of 2017 and 9.8 million b/d in 2018, which would mark the highest annual average production in US history, surpassing the previous record of 9.6 million b/d set in 1970.

EIA’s latest Short-Term Energy Outlook (STEO) is available at eia.gov