NEW YORK, Aug 9 (Reuters) - The U.S. Energy Information Administration said on Tuesday that it expects a smaller decline in U.S. crude oil production in 2016 than it forecast a month ago as an uptick in drilling will lead to more output later this year.
The agency said 2016 crude production will fall by 700,000 barrels per day (bpd) to 8.73 million bpd, according to the EIA's short term energy outlook. Previously, it forecast a drop of 820,000 bpd to 8.61 million bpd.
The decline in crude output comes amid a two-year rout in global oil markets on the back of lackluster demand and oversupply, effectively slashing benchmark prices by as much as 70 percent.
"After a steep drop over the past year in U.S. oil production, a recent uptick in the number of rigs drilling for oil is expected to contribute to more steady monthly oil output starting this fall," EIA Administrator Adam Sieminski said in a statement.
Last week, U.S. drillers added oil rigs for a sixth consecutive week, according to a Baker Hughes report, as producers continued boosting spending on expectations for higher prices in the future. The rig count rose by 44 during July, the biggest monthly increase since April 2014.
The EIA, however, expected a slightly bigger drop in crude production in 2017 - a decline of 420,000 bpd to 8.31 million bpd, compared with last month's forecast for a drop of 410,000 bpd to 8.2 million bpd.
The EIA also left its 2016 U.S. oil demand growth forecast unchanged at 160,000 bpd. It lowered its 2017 U.S. oil demand growth forecast to 100,000 bpd from 120,000 bpd previously.
(Reporting by Catherine Ngai; Editing by Chizu Nomiyama and Marguerita Choy)
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