NEW YORK (Reuters) – The government lowered its outlook for U.S. crude oil production in 2021, with expected output set to average 11.02 million bpd for the year, the U.S. Energy Information Administration (EIA) said on Tuesday.
Oil prices have rebounded from the lows touched in 2020 as Saudi Arabia pledged additional oil output cuts, prompting U.S. energy firms to increase drilling activity.
However, production is expected to remain under pressure in the short term as high levels of debt and the desire to preserve cash make oil companies reluctant to ramp up activity.
The EIA said it expects production to decline by 290,000 bpd, compared to its previous forecast for a drop of 190,000 bpd to 11.10 million bpd.
Output is expected to rise in the second half of 2021 and in 2022 as production from new wells will exceed the declines from older wells, the EIA said.
In 2022, U.S. crude output is expected to rise by 510,000 bpd to 11.53 million bpd, compared with expectations for an increase of 390,000 bpd previously.
The agency lowered its expectation for demand, saying U.S. petroleum and other liquid fuel consumption will rise 1.35 million bpd to 19.43 million bpd in 2021, compared with an estimated 1.45-million bpd increase forecast in January.
The EIA forecasts global consumption will average 97.7 million bpd for 2021, a rise of 5.4 million bpd, and expects demand to increase by 3.5 million bpd in 2022 to average 101.2 million bpd.