DALLAS (AP) — The decline in U.S. oil production may not be as severe as expected just a month ago.
The government is raising its forecast of U.S. production for both this year and 2017, as drillers respond to higher crude prices. Still, output won’t match 2015, which was the biggest year for U.S. production since 1972.
The Energy Department predicted Tuesday that domestic production will top 8.7 million barrels per day next year. That’s 140,000 more barrels per day than the department estimated just a month ago. Forecasters also raised their estimate of 2016 daily oil production by 110,000 barrels to more than 8.8 million barrels.
That’s still below 2015’s output that hit 9.4 million barrels per day.
The rising forecast is because this year’s rebound in oil prices has translated into more drilling, said Anthony Starkey, an energy analyst for S&P Global Platts. The number of active oil rigs in the U.S. has risen by more than 100 since oil prices plunged below $30 a barrel early this year. About 20 rigs have been added in just the past month.
“Most analysts have been revising their production numbers higher as rig activity increases and the outlook for prices has improved with the rhetoric from OPEC that they will do something to help balance the market” when cartel members meet later this month, Starkey said.
Meanwhile, OPEC trimmed its forecast for growth in world crude consumption over the coming decades but predicted again that oil and gas will still account for more than half the world’s energy in 2040.
In its annual forecast, the Organization of the Petroleum Exporting Countries said that world oil demand will be 109 million barrels a day by 2040. That is 16 million barrels more than current demand but 400,000 barrels a day less than OPEC predicted in its previous annual forecast.
The 14 OPEC nations are more interested, however, in doing something about short-term prices. OPEC oil ministers are scheduled to meet Nov. 30 to complete a September agreement on slightly reducing production to drive up prices.
It won’t be easy for OPEC to nail down the details.
OPEC nations have been pumping record amounts of crude this fall even though prices are less than half what they were in mid-2014. Iran, Libya and Nigeria have reportedly argued to be exempted from production cuts, which could put pressure on Saudi Arabia to shoulder more of the reduction. And it’s unclear whether any OPEC pullback might be offset by production from countries outside the cartel.
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