En­ergy De­part­ment grows less bear­ish about U.S. oil pro­duc­tion

Daily Local News (West Chester, PA) - - WEATHER - By David Koenig AP Busi­ness Writer

DAL­LAS >> 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 mid2014. 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.

THE AS­SO­CI­ATED PRESS

A pump jack op­er­ates near New Town, N.D.

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