EIA lowers 2019 US crude output forecast

The US Energy Information Administration (EIA) lowered its domestic crude output forecast for 2019 by 0.7pc to 12.27mn b/d.

The agency also kept flat its 2020 US crude production estimate at 13.26mn b/d, according to its monthly Short Term Energy Outlook (STEO). The 2019 and 2020 estimates would be record highs.

The EIA expects a slowdown in monthly production growth in the Lower 48 states averaging 50,000 b/d per month from the fourth quarter of 2019 through the end of 2020. This compared to an average growth of 110,000 b/d per month from August 2018 through July 2019.

Most of the projected growth will be from the Permian basin in west Texas and eastern New Mexico.

The EIA today also lowered its 2019 WTI spot price forecast by 2.9pc to $57.87bl, and its 2020 WTI price forecast by 5.6pc to $59.50/bl.

Brent prices are expected to average $65.15/bl in 2019 and $65/bl in 2020, down by 2pc and 3pc, respectively, compared with the previous forecast.

The EIA expects Brent prices to average about $5.50/bl above WTI during the fourth quarter of 2019 and in 2020, narrowing from a $6.60/bl spread in July. The narrowing of the spread reflects the agency's assumption that crude pipeline constraints from the Permian to refineries and export terminals on the US Gulf Coast will ease in the coming months.

The October Brent-October WTI futures spread was $5.23/bl yesterday at closing.