EIA's Oil Epiphany: US Crude Production Set to Break Its Own Ceiling

It seems the US Energy Information Administration (EIA) was sipping on some high-octane coffee, as they recently unveiled their "oil epiphany". By late 2023, they anticipate US crude oil production to dance past 12.9 million bpd, and by early 2024, it's expected to waltz right beyond the 13 million bpd mark, almost as if it's trying to impress at a debutante ball.

According to EIA's latest August Short-Term Energy Outlook (or STEO, for those who enjoy acronyms as much as a good coffee blend), the average oil production for 2023 is forecasted to be 12.8 million bpd. This happens to be 200,000 bpd more than what they hinted in their July STEO. Now, that's what we call an "oil epiphany"!

Global thirst for petroleum products shows no sign of a dry spell, and Saudi Arabia, ever the gracious host, is extending its voluntary production cuts. The outcome? Oil prices donning their hiking boots and marching uphill. From being close pals with $75/bbl in early July, Brent crude oil price quickly leapt over to the $86/bbl camp by 4 August. The EIA's tea leaves (or should we say, oil droplets?) hint at this price inching towards a cool $90/bbl by late 2023.

EIA's main man, Joe DeCarolis, chimed in, "Our oil epiphany tells us of continued growth in domestic oil production, thanks to the tag team of rising oil prices and impressive well productivity in the near future."

For those gripping the steering wheel and peering anxiously at the gas station prices, the EIA forecasts that US regular gasoline will set you back around $3.63/gal for 2023. That's up from their earlier estimate of $3.27/gal. This spike can send its thank you cards to both the ascending crude oil prices and a few unexpected hiccups in US refinery outputs this sunny season.

On the sizzling topic of July’s scorching temperatures, EIA’s "oil epiphany" was twinned with an electricity insight. The nationwide quest to combat the heat with air conditioning almost set a new record. EIA's counters clicked close to 388 billion KW/hrs of electricity gulped down by the US in July, almost elbowing the previous record set in August 2022. DeCarolis quipped, "July turned up the heat, and just like last summer's sequel, electricity consumption reached blockbuster levels."

For those eager beavers looking for more on EIA’s forecast, their full August 2023 Short-Term Energy Outlook is ready and waiting on the EIA website.