In the June Short-Term Energy Outlook (STEO), the US Energy Information Administration (EIA) forecasts that rising global production of petroleum and other liquid fuels (driven by OPEC, Russia, and the United States) will limit price increases for global crude oil benchmarks Brent and West Texas Intermediate (WTI). EIA forecasts production will increase more rapidly than consumption, ending the large global stock draws seen in the first two quarters of 2021 and limiting upward crude oil price movement.
At its 1 June meeting, OPEC+ (which includes OPEC members and several non-member countries) reaffirmed its commitment to continued production increases in the coming months. EIA forecasts OPEC’s annual production to average 26.9 million barrels per day (b/d) in 2021 and 28.7 million b/d in 2022. EIA also forecasts that production of petroleum and other liquids in Russia, an OPEC+ participant, will increase and that annual production will average 10.7 million b/d in 2021 and 11.5 million b/d in 2022.
The price of WTI crude oil increased from $52 per barrel (bbl) in January 2021 to $65/bbl in May, driving increases in the US crude oil rig count. EIA expects the US crude oil-directed rig count will likely continue rising in response to the rising WTI crude oil price.
EIA forecasts US crude oil production will increase each quarter through the forecast period, averaging 11.4 million bbl/d in the fourth quarter of 2021 (4Q21), the highest level since 1Q20, and 11.1 million bbl/d for all of 2021. EIA expects US crude oil production will average 11.8 million bbl/d in 2022.
EIA expects the global petroleum supply will increase over the next several months, resulting in an essentially balanced market in the second half of 2021. EIA then expects petroleum inventories to build in 2022 as production outpaces consumption.