Foreign news on June 6, the U.S. Energy Information Administration (EIA) said on Tuesday that compared with previous expectations, U.S. crude oil production will grow faster this year, while demand growth will slow down.
The EIA released a new outlook for the oil market after the Organization of the Petroleum Exporting Countries (OPEC) and its allies announced an extension to a deal to cut production until 2024. Saudi Arabia said it would voluntarily cut production by 1 million bpd in July to stabilize oil markets.
In its short-term energy outlook, EIA predicts that OPEC's production cuts will reduce global oil inventories slightly in each of the next five quarters and will boost global oil prices in late 2023 and early 2024.
EIA predicts that Brent crude oil prices will average $79.54 per barrel in 2023, about 1% higher than its previous forecast. U.S. West Texas Intermediate (WTI) prices are expected to average $74.60 a barrel in 2023, 1.3% higher than the previous forecast.
The EIA forecasts that total U.S. oil consumption will rise by just 100,000 barrels per day in 2023 to 20.4 million barrels per day, after forecasting an increase of 200,000 barrels per day in May.
While services and tourism should boost demand growth for gasoline and jet fuel this year, diesel consumption is set to decline as manufacturing's role in the economy recedes, the EIA said.
EIA forecasts that U.S. crude oil production will climb by 720,000 barrels per day this year to 12.61 million barrels per day, higher than its previous forecast of an increase of 640,000 barrels per day.
U.S. oil production growth has slowed as investors demanded higher dividend payouts and share buybacks, rather than capital spending. But U.S. production is still on track to set annual production records in 2023 and 2024, the EIA said.
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