US oil production is expected to hit a larger record this year than previously expected, the Energy Information Administration said on Tuesday, even as the agency warned that a glut of oil will weigh on prices in the months ahead.
The Department of Energy's statistical arm expects US oil production to average 13.53 million barrels per day this year, up from its prior forecast of 13.44 million bpd. Oil output averaged 13.23 million bpd last year, which was the prior record.
The anticipated surge in US output defies growing concerns that the oil market is oversupplied. The EIA noted that it expects crude oil inventories to rise throughout next year, putting significant downward pressure on prices in the months ahead.
Next year, the EIA now expects a marginal 0.1 per cent decline in US output to 13.51 million bpd, compared to its previous forecast of a decline of over one per cent in 2026, the agency said in its short-term energy outlook report.
US West Texas Intermediate crude prices are expected to average around $65 a barrel this year, the EIA said, a 15 per cent decline from last year. Brent crude oil prices are expected to average around $68.64 a barrel, down nearly 15 per cent from last year, the EIA said.
The revision to the EIA's US oil output forecast was due to higher production in July than the agency had previously estimated. The EIA also raised its forecasts for production from the offshore US Gulf region, noting that some projects there are ramping up faster than expected.
The offshore Gulf is expected to be the main beneficiary of US President Donald Trump's efforts to deregulate the energy industry in his bid to unleash more domestic output. The EIA said it expects offshore US Gulf oil output to average 1.89 million bpd this year, up from its earlier forecast of 1.84 million bpd.
The EIA also raised its global oil output forecast, largely because it now expects non-OPEC oil output to grow even more this year and next than previously estimated.
Meanwhile, the EIA broadly maintained its forecasts for output from the OPEC+ group, which comprises the Organisation of the Petroleum Exporting Countries and its allies, despite the group's recent announcements about raising production.
"Recent production increases due to higher OPEC+ targets will moderate as some members reach the practical limitations of their output and others aim to keep inventory builds from accelerating too quickly, limiting further decreases in oil prices," the EIA said.
(Reporting by Shariq Khan and Scott DiSavino in New York; Editing by Rod Nickel)
