The latest data released by the Energy Information Administration (EIA) on Tuesday reflects production increases despite the depressed world oil prices.
Added to this, oil production in the U.S. hit its highest monthly level in 43 years during May.
The production figures for May of 9.6 million barrels per day exceeds the May 2014 figures of 8.4 million barrels daily which at that stage, was the highest monthly average since 1988. Meanwhile, the current Short-term Energy Outlook report of the EIA also increased the estimate for U.S. crude oil for 2015 and 2016 over previous estimates for the same periods.
Adam Sieminski, the EIA administrator, issued a statement in which he said that despite the more than 40% drop in oil prices since last year June’s price of $106 per barrel, the estimated production for May will be the highest in the country since 1972.
Notwithstanding the record production in May, Sieminski still expects production to decline in the second half of 2015.
The forecast by the EIA estimates U.S. oil production at 9.43 million barrels daily which is an increase on the previous estimate of 9.19 million. Added to this, the forecast for 2016 shows an expected production decline to 9.27 million barrels per day, which still exceeds the previous forecast of only 9.21 million barrels daily.
For 2015, WTI crude prices (CLN5, + 1056%) are forecast for an average of $55.35 a barrel, increasing to $62.04 per barrel for 2016. These figures reflect a small increase on the previous estimate of $54.32 for 2015 and a decrease on the 2016 estimate of $65.57 per barrel. July crude was trading on the NYMEX at $60 a barrel on Tuesday.
Meanwhile, according to the EIA, the global benchmark Brent crude (LCON5, +1.05%) is now forecast to have an average price of $60.53 a barrel in 2015 and $67.04 per barrel in 2016. These figures show a decline from the previous estimates of $60.79 for 2015 and $70.49 for 2016. Brent crude for delivery in July was trading close to $65 per barrel on Tuesday.
With the unstable socio-political scenario playing out in the Gulf oil producing states and the influence this has on OPEC decisions, this means that oil prices should remain at present levels for the foreseeable future.
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