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EIA forecasts growing US crude production
Henry Hub to average $2.25 per million Btu in 2024, down 10% from 2023, 65% from 2022, slightly decreasing domestic gas production
Kristen Nelson Petroleum News
U.S. crude oil production set a record in 2023 and is forecast to continue growing this year and next, the U.S. Energy Information Administration said in its March EIA Short-Term Energy Outlook, released March 12.
EIA said both 2024 and 2025 are expected to exceed the U.S. production record set in 2023, with production averaging 13.2 million barrels per day this year, up from the record-setting 12.9 million bpd in 2023 and increasing to 13.7 million bpd in 2025.
The agency said the growth in U.S. production should help offset continued voluntary production cuts announced by the Organization of Petroleum Exporting Countries and associated producers, OPEC+, but EIA still expects a tight balance between supply and demand, resulting in higher Brent spot oil prices this year than were expected at the beginning of the year.
"Some significant sources of uncertainty remain in our crude oil forecasts, including how the Red Sea conflict could affect production and how strictly OPEC+ members will adhere to their voluntary production cuts," said EIA Administrator Joe DeCarolis.
Globally, EIA said it expects liquid fuels production to increase 0.4 million bpd this year, down from a 0.6 million bpd growth projected last month, and down from a 1.8 million bpd global increase in 2023.
The OPEC+ cuts limit overall 2024 growth, the agency said, but non-OPEC production is forecast to rise by 1.5 million bpd, "driven primarily by four countries in the Americas -- the United States, Guyana, Brazil and Canada."
Global liquid fuels production is projected to be up 2 million bpd in 2025 on a 0.9 million bpd increase in OPEC+ production as targets expire at the end of 2024, and an additional 1.1 million bpd of production outside of OPEC+.
Brent prices The Brent crude oil spot price averaged $82 per barrel last year, EIA said, and is projected to average $87 per barrel this year and $85 per barrel in 2025, a forecast up from February, when the agency forecast Brent to average $82 per barrel this year and $79 in 2025.
This month's forecast has Brent averaging $88 per barrel in the second quarter, up $4 per barrel from the February forecast, and $87 per barrel for 2024. up 5.6% from the previous forecast of $82 and up 6.7% from the February forecast for 2025 ($79) to $85.
The increase in forecast prices is based on extended crude oil production cuts by OPEC+, resulting in lower production growth contributing to "significant global oil inventory declines" for the second quarter.
EIA said its global oil balances forecast and the impact on prices "remain significantly uncertain."
U.S. vehicle miles traveled are expected to hit an all-time high this year and next based on population employment and economic growth trends, EIA said, but motor gasoline consumption will remain relatively flat through 2025 because of increased fleetwide vehicle fuel efficiency.
Henry Hub EIA expects the Henry Hub spot price to average about $2.25 per million British thermal units this year, down 10% from last year and down 65% from 2022, with low natural gas prices slightly decreasing domestic gas production.
"Some producers have announced curtailments in production or reductions in upstream spending on natural gas-directed activities this year," DeCarolis said. "But with so much domestic natural gas production tied to growing crude oil production, we expect natural gas production to decrease far more slowly than prices have."
The agency is forecasting that Henry Hub will stay under $2 per million Btu in the second quarter because natural gas inventories are projected to remain relatively high compared to the five-year average as natural gas consumption is lower in the shoulder season.
It was a mild winter in the Lower 48, EIA said, with 8% fewer heating degree days than the 10-year average.
Natural gas production EIA estimates that that U.S. dry natural gas production was almost 104 billion cubic feet per day in February, following a decline to 102 bcf per day in January due to weather-related outages, and expects production to remain near the February level in March and then decline slightly through the rest of the year, "as some producers have announced production curtailments because of low prices."
Average production is forecast to fall to 103 bcf per day by December and then average 104 bcf per day in 2025. \
The agency said it does not expect production to return to the December 2023 record of 106 bcf per day in this forecast period.
While low prices and a relatively stable rig count keep production at a slight decline through the rest of this year, EIA said, it expects it to begin to increase in 2025, as prices are forecast to rise to some $3 per million Btu, and there is an increased demand for liquefied natural gas.
EIA said most U.S. natural gas production is from three regions: the Permian, the Haynesville and Appalachia, with most production growth this year from the Permian, where most natural gas is associated gas from crude oil production. Haynesville production is mostly flat in 2024 because of low prices and a relatively low rig count, the agency said, but increases in 2025 because of Haynesville's relatively proximity to new LNG export facilities. Appalachian basin production is expected to remain relatively flat because of natural gas pipeline capacity constraints.
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