U.S. crude oil production is expected to fall by 860,000 bbl/d in 2020 to 11.39 million bbl/d, the U.S. Energy Information Administration (EIA) said on Nov. 10, a bigger decline than its previous forecast for a drop of 800,000 bbl/d.
U.S. crude oil production has recovered from the two-and-a-half-year lows touched in May mainly because shale producers have brought wells back online in response to rising prices.
However, the EIA expects U.S. crude oil production to generally decline to an average of 11 million bbl/d in the second quarter of 2021 because new drilling activity will not generate enough production to offset declines from existing wells. It expects drilling activity to rise later in 2021, reaching an average of about 11.3 million bbl/d in the fourth quarter.
Overall, U.S. crude output in 2021 is expected to fall by 290,000 bbl/d to 11.1 million bbl/d, compared with the EIA's previous forecast for a decline of 360,000 bbl/d.
The statistical arm of the Department of Energy now expects U.S. petroleum and other liquid fuel consumption to decline 2.38 million bbl/d to 18.16 million bbl/d in 2020, a slightly bigger decline than its previous forecast for a drop of 2.31 million bbl/d.
Oil prices have whipsawed in recent days as optimism from promising results for a COVID-19 vaccine has offset bearish sentiment due to rising coronavirus infections and renewed lockdowns in many countries.
Globally, the EIA forecasts that consumption of petroleum and liquid fuels will average 92.9 million bbl/d for all of 2020, down by 8.6 million bbl/d from 2019, before increasing by 5.9 million bbl/d in 2021.
The EIA expects that as global oil demand rises, forecast inventory draws in 2021 will cause some upward oil price pressures and forecasts international Brent crude oil prices will average about $47/bbl in 2021.
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BP and Delek Group-owned Ithaca Energy have started oil and gas production at the Vorlich field in Britain's central North Sea, the companies said on Thursday.
U.S. energy firms added oil and natural gas rigs this week, boosting the oil count for the fourth month in a row as producers return to the wellpad with crude prices mostly trading over $40 a barrel since mid June.