The US Department of Energy has revised its forecast for US crude oil production slightly downwards for this year and next, Commerzbank’s commodity strategist Carsten Fritsch notes.
Potential for OPEC+ to Increase Production
According to Fritsch, the Department of Energy now expects an increase of 300 thousand barrels per day for 2024 and 460 thousand barrels per day for 2025. This adjustment is attributed to lower oil prices, leading to lower production levels from September onwards.
Previously, the EIA had forecasted a production level of 14 million barrels per day to be reached by the end of 2025. However, this target is no longer expected to be met. The increase in production is primarily driven by the Permian Basin, the largest shale oil deposit in the US.
Despite the revised forecasts, the expected production increases would only cover a fraction of the global oil demand growth projected by the EIA for this year and the next. This leaves room for OPEC+ to potentially increase production levels in response to market dynamics.
Analysis and Implications for Investors
For investors, the downward revision in US crude oil production forecasts could have significant implications on global oil markets. The lower production levels could potentially lead to a tightening of supply, which may support oil prices in the near term.
Additionally, the potential for OPEC+ to increase production could introduce further volatility into the market, as decisions by the oil cartel could impact supply and demand dynamics. Investors should closely monitor these developments and consider diversifying their portfolios to mitigate risks associated with oil price fluctuations.