Lower prices for oil this year and next are likely to prompt a slowdown in U.S. crude production next year, but domestic output is still expected to reach an annual record in 2018, according to a report from the U.S. Energy Information Administration released Tuesday.
The report provided some additional support for oil prices Tuesday, with August West Texas Intermediate crude CLQ7, +1.26% trading above $45 a barrel and September Brent LCOU7, +1.15% climbing closer to $48 a barrel shortly after the release of EIA data.
In its monthly energy outlook report, the government agency forecast WTI prices at $48.95 a barrel for this year, down 3.6% from its June forecast. For 2018, it forecast $49.58—down 7.5% from the previous outlook.
The EIA also lowered its 2017 forecast on Brent crude by 3.6% to $50.79 and its 2018 outlook by 7.2% to $51.58.
“A lower forecast for crude oil prices is expected to shave a little off projected growth in U.S. oil production next year compared with the previous forecast, but annual output is still on track to reach a record high in 2018,” Howard Gruenspecht, acting administrator at the EIA, said in a statement.
“A revised oil price forecast that is $2 to $4 per barrel lower for late 2017 and during 2018 than the prior forecast will make it less profitable for some U.S. producers to drill for oil,” he said.
Still, the U.S. would account for almost 90% of the increase in global production of crude oil and other liquid fuels by non-OPEC countries in 2018,” said Gruenspecht.
The EIA reduced its 2018 U.S. crude output forecast by 1% to 9.90 million barrels a day, from the previous June forecast of 10.01 million barrels a day, but that would still “mark the highest annual average production in U.S. history,” the agency said in its report.
It left its 2017 production outlook unchanged at 9.33 million barrels a day.
On an annual basis, U.S. crude production peaked at 9.64 million barrels a day in 1970, according to EIA data dating back to 1860.