The Commodities Feed: Stronger Oil Prices Boost US Oil Production and Supply

The Commodities Feed: Higher prices help oil supply

The Energy Information Administration (EIA) has revised its oil production estimates for 2023 and 2024 higher as stronger oil prices improve the profitability of oil exploration.

 

Energy – EIA revise higher oil production

In its latest short-term energy outlook report, the EIA revised up domestic oil production estimates as higher oil prices should help domestic producers push up spending and production plans. The administration estimates that US oil production will increase to an average of 12.8MMbbls/d for 2023 compared to its earlier estimates of 12.6MMbbls/d and output of 11.9MMbbls/d in 2022. For 2024, production estimates are revised higher to 13.1MMbbls/d compared to earlier estimates of 12.9MMbbls/d. Meanwhile, US demand for crude oil is revised higher from 20.44MMbbls/d to 20.47MMbbls/d in 2023, compared to 20.28MMbbls/d of consumption in 2022. However, for 2024, the consumption estimates were revised down to 20.75MMbbls/d compared to earlier estimates of 20.79MMbbls/d.

Meanwhile, the American Petroleum Institute (API) reported that the US crude oil inventories increased by 4.1MMbbls over the last week, in contrast to market expectations of a drawdown of around 0.2MMbbls. However, Cushing crude oil stocks are reported to have decreased by 0.1MMbbls. On the products side, API reported that gasoline and distillates inventories fell by 0.4MMbbls and 2.1MMbbls respectively, over the week ending 4 August. The more widely followed EIA report will be released later today.

China could increase crude oil processing at domestic refineries in August as some of the plants complete maintenance and ramp up output. According to OilChem, operating rates at state refineries could increase to 81.25% in August compared to around 80% in July.