U.S. OIL PRODUCTION TO RISE FASTER THAN EXPECTED AS SAUDI CUTS TIGHTEN MARKET

(Bloomberg) – U.S. oil production this year will rise faster than previously expected, providing additional crude supplies to a market that has tightened because of Saudi Arabian output cuts, according to a new government forecast.

Higher-than-expected well productivity and rising crude prices will help boost U.S. production to a record 12.8 MMbpd in 2023, up from a previous forecast of 12.6 MMbpd, according to a monthly report from the U.S. Energy Information Administration released Tuesday. The U.S. averaged about 11.9 MMbpd in 2022.

The additional U.S. production would help supply a market that has tightened after the Organization of Petroleum Exporting Countries and its allies cut output to prop up prices. OPEC leader Saudi Arabia recently extended its 1 MMbpd production cuts for another month, sending its output to the lowest in years.

Production in both the U.S. and globally is forecast to increase further next year. World output will grow to 103 MMbpd in 2024, up 1.7 MMbpd from this year, the EIA said. Over 70% of that growth is expected to come from non-OPEC countries, led by the U.S., Brazil, Canada, Guyana and Norway. U.S. output will climb to 13.1 MMbpd next year, the agency said.

Meanwhile, U.S. consumption of refined products this year will be lower than previously expected, the EIA said. The country will use 4% less jet fuel in the third quarter than in its prior forecast as the U.S. air travel boom starts to lose steam. The agency’s forecasts for gasoline and diesel consumption also were adjusted lower for both the third quarter and full year.

Still, the EIA’s forecast for total oil demand in the U.S. this year was increased because of the growing use of natural gas liquids.