Permian problems: US cuts oil output outlook

The pace of US crude production growth might be slowing or at least that’s what the government is seeing for now, reports Bloomberg.

Last month, the agency said the US is set to become the world’s top oil producer in 2019. The EIA still sees production reaching 12 million bpd by the end of next year.

The US benchmark crude has jumped more than 14% this year. Drilling has plateaued since late June, with the US oil rig count ticking lower for four out of the last seven weeks, with concerns lingering over bottlenecks in the key Permian Basin tempering growth.

“Because crude oil production is forecast to be lower in 2018, it lowered the overall output forecast for 2019,” said Tim Hess, a product manager for the EIA’s Short-Term Energy Outlook. “The lower forecast for output this year reflects slightly slower than expected growth in middle quarters of this year, possibly related to pipeline constraints out of the Permian basin that have reduced wellhead prices in the region.”

The EIA sees domestic crude output averaging 10.68 million bpd this year, lower than previous estimate of 10.79 million bpd, yet still above the 1970 record of 9.6 million bpd, according to the agency’s Short-Term Energy Outlook released yesterday.

Meanwhile, globally, OPEC members and allies collectively agreed to boost output by 1 million bpd in response to consumers’ concern with high oil and fuel prices.

Its global crude production forecast for next year was lowered to 101.94 million bpd from 102.54 million bpd previously. The agency also cut its world demand growth estimate for 2019 to 101.66 million bpd from 101.91 million.