US oil production forecasts for 2017 and 2018 have been boosted significantly as a result of rising prices as well as improved modelling techniques for predicting output down to the well level.
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LONDON, March 9 (Reuters) - U.S. oil production forecasts for 2017 and 2018 have been boosted significantly as a result of rising prices as well as improved modelling techniques for predicting output down to the well level.
Crude production is expected to reach 9.53 million barrels per day (bpd) in December 2017, according to the latest forecasts from the U.S. Energy Information Administration (EIA).
Forecast output for December 2017 has been revised up from 8.29 million bpd when the agency prepared its predictions in March last year (http://tmsnrt.rs/2moZoqc).
The forecasts are contained in the "Short-Term Energy Outlook" EIA publishes every month. Forecast output has been revised higher every month since September 2016.
Revisions are concentrated in output from the Lower 48 states, excluding federal waters in the Gulf of Mexico, so they are mostly about shale output, rather than offshore fields and Alaska (http://tmsnrt.rs/2moXWnN).
EIA has revised expected output at the end of 2017 from the Lower 48 excluding the Gulf of Mexico up by 1.4 million bpd since March 2016 (http://tmsnrt.rs/2niqnRS).
Upward revisions stem from a combination of higher oil prices, an increased number of rigs drilling, and improvements in methodology.
Operators have added many more rigs and produced more oil than the agency was forecasting just six months ago.
Oil prices ended up being $5 per barrel higher in the fourth quarter of 2016 than the agency forecast back in August. Prices in the first quarter of 2017 have so far averaged about $7 higher.
Higher prices have contributed to more drilling, particularly in the Permian Basin of western Texas and eastern New Mexico, raising the current rig count and actual production the forecast uses as a baseline.
Higher rig counts have also revealed new information about the price levels at which operators in certain areas can grow production, which have filtered through to the models that the agency uses.
In addition to the price impact, the agency has made a number of improvements to its methodology.
According to the agency, these changes have been phased in over several months and contributed to the upward drift in the forecasts.
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