NEW YORK (Reuters) – U.S. oil production is expected to hit a higher record this year than previously expected, the Energy Information Administration said on Tuesday, even as the agency warned that an oil glut will weigh on prices in the coming months.
The Department of Energy’s statistical arm expects U.S. oil production to average 13.53 million barrels per day this year, up from its previous forecast of 13.44 million bpd. Oil production averaged 13.23 bpd last year, which was the previous record.
The expected increase in U.S. production defies growing concerns that the oil market is oversupplied, and the EIA noted that it expects crude oil inventories to rise over the next year and put significant downward pressure on prices in the coming months.
Prices for US West Texas Intermediate crude oil are expected to average around $65 a barrel this year, the EIA said, a 15% decline from last year. Brent crude oil prices are expected to average around $68.64 a barrel, down nearly 15% from last year, the EIA said.
The revision to the EIA’s U.S. oil production forecast was due to higher production in July than the agency had previously estimated, it said. The EIA also raised its forecasts for production in the US offshore Gulf region, noting that some projects there are ramping up faster than expected.
The Gulf Coast is expected to be the biggest beneficiary of US President Donald Trump’s efforts to deregulate the energy industry as he seeks to unleash more domestic production. The EIA said it expects U.S. Gulf offshore oil production to average 1.89 million bpd this year, up from its previous forecast of 1.84 million bpd.
(Reporting by Shariq Khan and Scott DiSavino in New YorkEditing by Rod Nickel)