It was learned that the U.S. Energy Information Administration (EIA) released its monthly report on Wednesday (September 7) Eastern Time, lowering its annual oil output target and raising its global demand outlook, as OPEC and its allies plan to cut production to defend crude oil prices. This further increases supply risk.
The EIA said in the report that the agency lowered its forecast for U.S. domestic crude oil production next year to 12.63 million barrels per day, from 12.7 million barrels per day previously. Meanwhile, the agency expects annual global crude oil consumption to rise by about 2 million barrels per day through next year.
The forecast adds another layer of worry to the crude market, which has faced unprecedented volatility since the start of the Russia-Ukraine conflict amid a widespread ban on Russian crude. The U.S. has now become a major supplier of alternative crude oil, especially Europe, which has been hit the hardest by the crisis. At the same time, OPEC+ also announced earlier that it will cut production slightly in October.
While oil prices have been high this year, U.S. shale producers have been holding back production growth, prioritizing dividends to shareholders instead. Barclays analysts even believe the practice will continue into next year.
Still, even though the EIA cut its 2023 production forecast to the lowest level since February, it would still be the highest U.S. crude output for the year, after an annual record of 12.3 million barrels per day set in 2019. The EIA also lowered its production forecast for 2022 to 11.79 million bpd for the third month in a row, from an earlier forecast of 11.86 million bpd.