Increased crude oil production forecast for rest of 2023 and 2024

EIA Weekly Crude Oil Inventories, June 3

The government came out this week with a revised and increased forecast for U.S. crude oil production in 2023 and 2024.

The August Short-Term Energy Outlook from the U.S. Energy Information Administration predicts higher well productivity and higher crude oil prices continuing into 2024.

  • Crude oil prices. The Brent crude oil spot price averages $85 per barrel (b) in August in our forecast. Crude oil prices have increased since June, primarily because of extended voluntary cuts to Saudi Arabia’s crude oil production and increasing global demand. We expect these factors will continue to reduce global oil inventories and put upward pressure on oil prices in the coming months, with the Brent price averaging $86/b in the second half of 2023 (2H23), up about $7/b from our July Short-Term Energy Outlook (STEO) forecast for the same period. Rising global oil production in 2024 in our forecast keeps pace with oil demand and puts moderate downward pressure on crude oil prices beginning in the second quarter of 2024 (2Q24).
  • Global oil production. We forecast global liquid fuels production will increase by 1.4 million barrels per day (b/d) in 2023. Non-OPEC production increases by 2.1 million b/d in 2023, which is partly offset by a drop in OPEC liquid fuels production. In 2024, global production increases by 1.7 million b/d, with 1.2 million b/d coming from non-OPEC countries. Non-OPEC production growth in the forecast is led by the United States, Brazil, Canada, Guyana, and Norway.
  • U.S. crude oil production. As a result of higher expected well-level productivity and higher crude oil prices, we expect U.S. crude oil production will average 12.8 million b/d in 2023 and 13.1 million b/d in 2024, both annual records.
  • Natural gas production. Associated natural gas production growth in the Permian Basin, driven by higher oil prices, has supported U.S. dry natural gas production in 2023 despite a decline in natural gas prices. We expect production to average about 104 billion cubic feet per day (Bcf/d) through the end of 2024, compared with 103 Bcf/d in 2Q23. Flat production largely reflects continuing growth in associated natural gas production offset by declines in natural gas directed drilling.
  • Electricity generation. Hot temperatures in July, especially in the southern states, pushed U.S. electricity demand to near-record levels. We estimate that electricity sales totaled 388 billion kilowatthours in July, roughly equal to the record electricity consumption in July and August 2022.
  • U.S. economy. U.S. GDP growth in our forecast increases by 1.9% in 2023, up from 1.5% in last month’s forecast. We apply energy price forecasts to the S&P Global macroeconomic model to generate the forecasts for the U.S. economy used in our STEO.