Oil production expected to grow 7.4% in 2018
The EIA released its monthly Short Term Energy Outlook this week, outlining the state of the energy industry through the end of 2018.
The U.S. oil industry remains resilient, and is likely to grow further in 2018. The EIA has increased its predictions of this growth, and is currently estimating the U.S. will produce 9.92 MMBOPD next year. This represents 7.4% growth from 2017 to 2018, and is 0.8% higher than last month’s estimation of 2018 production.
Predictions of OPEC production have fallen, indicating the EIA expects OPEC to continue to constrain output. Predicted oil supply from OPEC countries has fallen by 0.7% in Q4 2017, and by 0.5% in 2018. The decrease in OPEC production translates through to the overall supply situation, as the EIA now forecasts 100.07 MMBOPD of production in 2018, down from previous estimates of 100.28 MMBOPD.
Oil demand forecasts are not quite as positive for the industry, as the EIA has revised its forecast downward. Total demand in 2018 is now expected to be 99.89 MMBOPD, 0.1% below the previous forecast of 99.95 MMBOPD. However, expectations of Chinese demand have grown, and current forecasts predict the East Asian country will demand 13.2 MMBOPD in 2018.
The EIA does not expect oil prices will improve significantly in the next year, as current forecasts call for an average WTI price of $50.57 in 2018. This is 2% higher than last month’s 2018 WIT forecast, though, so the news is still positive. The EIA does expect a larger spread between WTI and Brent. Previous forecasts predicted WTI prices would be $2 less than Brent, but this has been increased to $3.50. This could be a positive for U.S. companies, as a larger spread would encourage exporting U.S. oil to other countries.
Gas production, consumption, exports all up
Revisions to natural gas forecasts are more positive for the industry. Predicted natural gas production has risen by 0.5%, while expected gas consumption has risen by 1.4%. The effects of Hurricane Harvey mean gas export predictions have fallen, but tremendous growth is still expected. Current forecasts call for 33.8% growth in gas exports in 2017, and 21.6% growth in exports in 2018. Natural gas price predictions are not quite as rosy, as current expectations dictate an average Henry Hub price of $3.19/MMBTU.
