The US government further pared its forecast for domestic crude output next year, reflecting the oil industry's struggle to ramp up activity in the wake of rampant inflation and logistical bottlenecks.
Production will average 12.31mn b/d in 2023, down from last month's forecast of 12.36mn b/d, the Energy Information Administration (EIA) said today in its latest Short-Term Energy Outlook (STEO). It was the fifth consecutive month that EIA has downgraded next year's output.
Production in 2023 would fall just short of the record 12.32mn b/d set in 2019, the year before the Covid-19 pandemic spurred a collapse in drilling. The EIA expects US crude output this year will average 11.83mn b/d, up from 11.75mn b/d forecast last month.
Growth projections have been cut in half since the summer, with publicly-traded companies adhering to a mantra of capital discipline as they focus on boosting dividends and share buybacks rather than expanding drilling to take advantage of higher prices.
Cost pressures and supply-chain constraints continue to be felt across the industry, executives from oil companies warned on recent third-quarter earnings calls. "This is particularly true in the US shale, where rapidly escalating costs, combined with extremely tight supply, are limiting the pace of industry-wide production growth," ConocoPhillips chief executive Ryan Lance said last week.
Both ExxonMobil and Chevron, the biggest US oil producers, have scaled back their most bullish growth expectations for the Permian shale basin this year. Although the region has outpaced all other shale basins coming out of the pandemic, it may struggle to keep growing at a record pace going forward, Diamondback Energy chief executive Travis Stice said today.
West Texas Intermediate (WTI) crude spot prices are expected to average $95.88/bl this year, up from the EIA's prediction last month of $95.74/bl.
The EIA expects WTI prices in 2023 will average $89.33/bl, up from the $88.58/bl predicted last month.
