EIA Lowers USA Crude Oil Production Forecast for 2024 and 2025

In its latest short term energy outlook (STEO), which was released recently, the U.S. Energy Information Administration (EIA) reduced its U.S. crude oil production forecast for this year and next year.

The EIA’s October STEO projected that U.S. crude oil output, including lease condensate, will average 13.22 million barrels per day in 2024 and 13.54 million barrels per day in 2025. The organization’s previous STEO, which was released in September, forecast that U.S. crude oil production would average 13.25 million barrels per day this year and 13.67 million barrels per day next year.

In its latest STEO, the EIA projected that Lower 48 states, excluding the Gulf of Mexico, will contribute 11.03 million barrels per day of the 2024 total. The Federal Gulf of Mexico is expected to produce 1.77 million barrels per day of this year’s total and Alaska is expected to produce 0.42 million barrels per day of the 2024 total, according to the STEO.

Nex year, Lower 48 states, excluding the Gulf of Mexico, are anticipated to contribute 11.32 million barrels per day of the total U.S. crude oil production figure, the STEO showed. The Federal Gulf of Mexico is expected to produce 1.82 million barrels per day of next year’s total and Alaska is expected to produce 0.40 million barrels per day of the 2025 total, the STEO highlighted.

A quarterly breakdown included in the October STEO projected that U.S. crude oil production will average 13.45 million barrels per day in the fourth quarter of this year, 13.46 million barrels per day in the first quarter of 2025, 13.53 million barrels per day in the second quarter, 13.54 million barrels per day in the third quarter, and 13.64 million barrels per day in the fourth quarter.

In its previous September STEO, the EIA forecast that U.S. crude oil production would average 13.47 million barrels per day in the fourth quarter of 2024, 13.45 million barrels per day in the first quarter of next year, 13.60 million barrels per day in the second quarter, 13.73 million barrels per day in the third quarter, and 13.89 million barrels per day in the fourth quarter.

Both STEOs put average 2023 U.S. crude oil production at 12.93 million barrels per day. Lower 48 states, excluding the Gulf of Mexico, contributed 10.64 million barrels per day of the total 2023 U.S. crude oil production figure, the Federal Gulf of Mexico produced 1.87 million barrels per day, and Alaska produced 0.43 million barrels per day, both STEOs showed.

According to data on the EIA website, which shows yearly U.S. field production of crude oil from the 1850s to 2023 and was last updated on September 30, U.S. field production of crude oil has never seen a yearly average of 13 million barrels per day or above. The closest it came was in 2023, when it averaged 12.935 million barrels per day, the data outlined.

“We reduced our 2025 forecast for U.S. Lower 48 states (L48) crude oil production in the October STEO from last month by one percent to 11.3 million barrels per day,” the EIA noted in its October STEO.

“This reduction reflects a downward revision to our West Texas Intermediate (WTI) crude oil price forecast. We now expect WTI will average $72 per barrel in 4Q24, about $6 per barrel lower than last month’s forecast,” it added.

“Because there is about a six-month lag between price changes and producer activity, the recent price declines will begin reducing U.S. crude oil production in mid-2025. By December 2025, U.S. L48 crude oil production will be 11.4 million barrels per day, two percent lower than our September STEO forecast,” it continued.

The EIA’s latest STEO also stated that recent industry survey results align with a slowdown in U.S. exploration and production company activity.

“The Dallas Fed Energy Survey’s Business Activity Index for 3Q24 indicates a contraction, signaling concerns about demand in the oil and natural gas sector,” the EIA added, noting that “this contraction is the first in the activity index since 3Q20”.

The Federal Reserve Bank of Dallas website stated that “activity in the oil and gas sector declined slightly in third quarter 2024, according to oil and gas executives responding to the Dallas Fed Energy Survey”.

“The business activity index, the survey’s broadest measure of the conditions energy firms face in the Eleventh District, decreased from 12.5 in the second quarter to -5.9 in the third quarter,” the website noted.

“The company outlook index turned negative in the third quarter, plunging 22 points to -12.1, suggesting modest pessimism among firms. The overall outlook uncertainty index jumped 25 points to 48.6, suggesting mounting uncertainty,” it added.

In its October STEO, the EIA said its expectation of lower crude oil prices reduced its production forecasts the most for the Permian region.

“Although we lowered our forecast for crude oil production in the Permian, we still expect production in the region to increase over time,” the EIA stated in the STEO.

“In addition to ongoing improvements in oil well productivity in the region, the Matterhorn Express pipeline recently began operation, which will help alleviate constrained takeaway capacity for associated natural gas and allow for additional crude oil production,” it added.

“More production from regions outside the Permian, such as the Eagle Ford and Bakken, offset our reduction of Permian production early in the forecast period,” it continued.

“The increase in our production forecast for these regions in the coming months relative to the September STEO primarily reflects historical revisions in our survey, EIA-914, Monthly Crude Oil and Natural Gas Production,” it went on to state.

“However, similar to our forecast for the Permian region, we expect lower prices to bring down production in these regions compared with last month’s forecast beginning in mid-2025,” it warned.

The EIA highlighted in its October STEO that Hurricane Helene led to the shutdown of 29 percent of oil production in the Gulf of Mexico in September.

“This disruption followed Hurricane Francine, which shut in up to 42 percent of crude oil production in GOM,” it said.

“As a result, we reduced our estimates and forecasts for both September and October GOM crude oil production. However, we expect GOM will return to our previously forecast level by November,” it added.

To contact the author, email andreas.exarheas@rigzone.com