U.S. oil companies are expected to reduce oil output temporarily by nearly 2 million barrels per day (MMbbl/d) as lower crude prices force companies to cut back operations, the U.S. Energy Department said on April 7.
“The private sector and the free market are driving those cuts,” the department said regarding projections in a U.S. Energy Information Administration, or EIA, report.
The United States, the world’s top oil and natural gas producer, pumped a record of more than 12 MMbbl/d in 2019, according to the EIA.
But global prices for crude have dropped as oil demand has plummeted roughly 30%, or about 30 MMbbl/d, as the coronavirus pandemic slams economies. At the same time, Saudi Arabia and Russia have been flooding markets with extra supply.
The EIA’s short-term energy outlook released on April 7 projected that U.S. oil output will slowly fall through the first quarter of 2021 to just shy of 11 MMbbl/d, or about 1.8 MMbbl less than the peak of late last year.
Saudi Arabia, Russia and allied oil producers will discuss stabilizing global oil markets on April 9, but will agree to deep cuts to their output only if the United States joins with curbs to help prop up prices that have been hammered by the coronavirus crisis.
U.S. President Donald Trump said on April 6 that OPEC, of which Saudi Arabia is the de facto leader, had not pressed him to ask U.S. oil producers to reduce their output to support prices. Trump said he thought U.S. cuts were “happening automatically” by private companies.
Trump has said he expects Saudi Arabia and Russia, which can orchestrate statewide production cuts because they have national oil companies, will participate in cutting about 10 MMbbl/d to 15 MMbbl/d.
U.S. Energy Secretary Dan Brouillette will participate on April 10 in a virtual G20 ministerial meeting on restoring calm to global energy markets with his counterparts around the world, said Shaylyn Hynes, a department spokeswoman.
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