US oil production has turned a corner after a long period of weak petroleum prices, the government said, with volumes rising for the first time since early 2015.
The Energy Information Administration forecast that oil output from the US will increase 1.3 per cent to 9m barrels per day in 2017, abandoning an earlier prediction of a 0.9 per cent fall.
In the first forecast for 2018 in its monthly Short-Term Energy Outlook, the statistical agency said US crude production will rise another 3.3 per cent, or 300,000 b/d, to 9.3m b/d. Production hit bottom last September, EIA said.
The path of US production is closely watched in a world oil market grappling with excess supply. The Opec cartel and important exporters such as Russia have agreed to cut back output to bring the market back into balance.
Higher estimates of oil demand in industrialised countries led EIA to estimate that global oil stocks drew down in the third quarter of 2016 — the first quarterly decline in inventories since late 2013. However, uncertainty over future production from countries such as Libya, Nigeria and the US “could delay consistent global inventory withdrawals until the second half of 2018,” it added.
Strengthening demand and the Opec agreement have helped to boost oil prices to more than $50 a barrel, in turn reinvigorating drilling among US shale producers which are not participating in the cuts.
The EIA said total US liquid fuels production — which include petroleum as well as natural gas liquids — will increase by 300,000 b/d in 2017 and by a sharp 700,000 b/d in 2018, “in response to rising oil prices and increases in drilling productivity”.