Energy Department Trims US Oil Production Forecast

U.S. crude oil production is expected to fall more this year and in 2017 than had been expected, and that should lead to a slow rise in crude oil and retail diesel and gasoline prices, the Department of Energy said in its latest Short-Term Energy Outlook released April 12.

DOE’s Energy Information Administration forecasts domestic production of 8.6 million barrels a day this year, down from 8.67 million in its March 8 report. For 2017, the forecast now is 8.04 million barrels a day, down from 8.19 million in the March report.

In 2015, crude production was 9.43 million barrels a day, up from 8.71 million in 2014, EIA said.

News of tighter oil supplies to come led to higher prices for crude oil on the New York Mercantile Exchange on April 12. Crude closed at $42.17 a barrel, up from $40.36 on April 11. It was the highest close since Nov. 25, when it was $43.04.

“The United States will account for most of the decline this year in global non-OPEC production, which is expected to drop for the first time in eight years,” EIA Administrator Adam Sieminski told Bloomberg News.

Bloomberg reported that U.S. oil drillers have sidelined more than two-thirds of the country’s rigs since October 2014 as prices have tumbled from that year’s peak. The number of active oil rigs in the United States fell to 354 during the week of April 4, the fewest since November 2009, according to data  compiled by Baker Hughes, a provider of oil field services.

As for refined products, the EIA report says retail diesel will average $2.11 a gallon this year and $2.33 in 2017. Gasoline is expected to average $1.94 a gallon this year and $2 in 2017, EIA said.