US crude oil production will drop by an average of 990,000 barrels per day, according to the Energy Information Administration, for an average of 11.26 million bpd.
That is a far greater loss than the agency expected during its previous forecast made in the July Short Term Energy Outlook.
In July, the EIA had forecast that crude oil production in the United States would fall by an average of 620,000 barrels per day for the full year 2020.
The caveat? That the August STEO “remains subject to heightened levels of uncertainty because mitigation and reopening efforts related to the 2019 novel coronavirus (COVID-19) continue to evolve,” the EIA warned.
The assumptions for this month’s STEO were based on macroeconomic forecasts from IHS Markit, which assumes that GDP fell 5.2 percent in H1 2020, and will rise from Q3 2020 through 2021.
In addition to the reduced outlook for US oil production, the STEO sees high crude inventory levels and excess production capacity as a drag on oil prices in the coming months.
The EIA’s estimate for global liquid fuels production came in at an average 91.8 million barrels per day in Q2—8.6 million bpd less than the same period in 2019, driven by production quotas for OPEC and reduced production in the United States due to low oil prices.
The EIA, however, is expecting US production to average 11.14 barrels per day next year, a small decline than what it was forecasting last month. That is as US oil demand next year is expected to rebound by 1.57 million bpd to 20.03 million bpd.