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EIA crude forecast down following Harvey Agency’s short-term energy forecast says 9.2M bpd in August down some 40,000 bpd from July; 2017 average expected to be 9.3M bpd Kristen Nelson Petroleum News
U.S. crude oil production is estimated to have averaged 9.2 million bpd in August, down some 40,000 bpd from July, the U.S. Energy Information Administration said Sept. 12 in its Short-Term Energy Outlook.
The agency has also dropped its crude oil forecast for 2018. The forecast remains the same for this year, an estimated 9.3 million bpd, but for next year is down from an August estimate of 9.9 million bpd.
“EIA continues to expect growing oil output, with crude oil production forecast to reach an all-time high of 9.8 million barrels per day in 2018, topping the old 1970 record of 9.6 million barrels per day,” acting EIA Administrator John Conti said in a statement accompanying the forecast.
“Downward revisions to the forecast partly reflect the effects of Hurricane Harvey,” he said. “Industry watchers across the sector will have to grapple with uncertainty regarding the timeline for the return to normal operations for critical energy infrastructure, including refineries, in the coming weeks and months,” Conti said.
Significant disruptions EIA noted significant disruptions to the U.S. energy market in recent weeks due to Hurricane Harvey, with “continuing uncertainty ... regarding the timeline for the return to normal operations for a broad range of upstream production, refining, pipeline, and terminal and distribution infrastructure.”
There was a significant drop in refinery operations following Hurricane Harvey, with U.S. gross refinery runs averaging 14.8 million bpd the week ending Sept. 1, down by 3.1 million bpd from the previous week, EIA said.
Conti said “operations are beginning to ramp up. EIA expects refinery runs in September to average 15.3 million barrels per day, well below the August level,” but with runs increasing into October.
US production, prices U.S. crude oil production, at an estimated 9.2 million bpd in August, is down 40,000 bpd from July, EIA said, with Gulf of Mexico production down 70,000 bpd from July, averaging 1.6 million bpd.
The agency said that as of the publication of this forecast, “many oil production platforms in the Gulf of Mexico had returned to operation,” and U.S. crude oil production is projected to grow in the coming months.
Producers also curtailed production in the Eagle Ford, but EIA said production declines there were offset by growth in other Lower 48 areas.
North Sea Brent crude oil spot prices averaged $52 per barrel in August, EIA said, and are forecast to average $51 per barrel this year and $52 per barrel in 2018. The agency expects West Texas Intermediate to average about $2 per barrel below Brent both this year and next.
Natural gas EIA is forecasting U.S. dry natural gas production to average 73.7 billion cubic feet per day this year, up 1.4 bcf per day from 2016, with 2018 production forecast to be 4.4 bcf per day higher than this year.
The Henry Hub natural gas spot price averaged $2.90 per million Btu in August, down 8 cents from July.
Expected growth in natural gas exports and domestic consumption next year contribute to a forecast for Henry Hub to rise from a 2017 average of $3.05 per million Btu to a 2018 average of $3.29.
EIA said it expects the share of U.S. utility scale electricity generation from natural gas to fall from an average of 34 percent in 2016 to about 31 percent in 2017 as a result of higher natural gas prices and increased power generation from renewables and coal.
The share of power generation from coal is projected to rise from 30 percent in 2016 to 31 percent in 2017, with projected generation shares for natural gas and coal in 2018 averaging 31 percent and 32 percent respectively.
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