EIA Short Term Energy Outlook

[dan_s]

The EIA released its monthly Short-Term Energy Outlook today, outlining predicted energy production and consumption through 2018.

The EIA revised its estimates of the 2016 crude supply build, decreasing the expected supply build to 0.8 MMBOPD from 0.9 MMBOPD. Additionally, future inventory balances were revised, with inventory decreasing by 0.1 MMBOPD in 2017 and building by 0.2 MMBOPD in 2018.

Previously the EIA had predicted that the global crude inventory would build by 0.3 MMBOPD in 2017 and decline by 0.1 MMBOPD in 2018. This revision was due to reassessment of historical consumption in China and Africa, which revealed higher levels than previously estimated.

The EIA predicts that U.S. crude production will grow more than any other non-OPEC country in the next two years. While production in the U.S. decreased in 2016 by almost 0.3 MMBOPD, production is predicted to grow by 0.3 MMBOPD in 2017 and nearly 1.0 MMBOPD in 2018. Much of this growth is due to tight oil, with the Permian growing by about 0.5 MMBOPD over the period.

My Take: U.S. production will only grow by 1,000,000 bbls per day in 2018 if oil prices exceed $60/bbl. The world is going to need every drop as global demand is expected to increase by 2,500,000 bbls per day over the next two years. Outside of the U.S., non-OPEC production is flat.