US Scales Back Output Growth Projections

10 Aug 2018 Issue: 61 / 32 By: James Cockayne

The US government’s Energy Information Administration (EIA) has scaled back its forecasts for output growth this year and next in the light of infrastructure bottlenecks which are increasingly limiting output growth at Texas’ key Permian shale play, which now accounts for 30% of US crude output.

Should the latest downward revisions to the EIA's US crude output projections play out, or, indeed, intensify over the coming months, this will have a major impact on the global crude supply/demand balance over the coming months. Global oil markets currently appear well balanced, leading Saudi Arabia and other Opec members to cut back on planned output increases in July (MEES, 10 August). But this could rapidly change if US production underperforms expectations and Iran output nosedives in the face of a ramp-up in US sanctions (MEES, 10 August).

The EIA’s latest Short Term Energy Outlook, released 7 August, forecasts average 2018 crude output of 10.68mn b/d with 11.70mn b/d for 2019. These figures are down 110,000 b/d and 90,000 b/d respectively from month-ago EIA forecasts (MEES, 13 July). But, even with these downward revisions, this and next year’s output are set to smash the previous annual record of 9.6mn b/d set in 1970. (CONTINUED - 1543 WORDS)