U.S. crude oil production will reach a record high in 2018, despite Harvey’s impact on the industry.
U.S. crude oil production will grow in the remaining months of this year and reach its highest-ever annual average in 2018, despite the impact of Hurricane Harvey, the Energy Information Administration (EIA) forecast on Sept. 12.
The EIA also said that while refinery output declined by 3.1 million barrels per day (MMbbl/d) to an average of 14.8 MMbbl/d during the week of Sept. 1, that reduction would be balanced by a decline in petroleum product net exports.
U.S. crude oil production in August fell 40,000 bbl/d from July, averaging 9.2 MMbb/d for the month. But the EIA projects U.S. average crude oil production to reach 9.3 MMbbl/d for 2017 and 9.8 MMbbl/d in 2018—the highest annual average in U.S. history.
The 2018 record would surpass the 9.6 MMbbl/d average in 1970.
The Gulf of Mexico’s production also dropped by 70,000 bbl/d from July, averaging 1.6 MMbb/d for August.
The reduction could possibly contribute to larger-than-typical inventory draws for September, the EIA said. The EIA expects net petroleum product exports to average 1.1 MMbbl/d in September, down from an average of 2.9 MMbb/d in the first eight months of 2017.
Though Harvey set refinery operations back significantly from the 17.2 MMbbl/d seen in August, refinery runs are forecasted to increase from 15.3 MMbbl/d in September to 15.9 MMbbl/d in October.
The EIA forecasts North Sea Brent crude spot prices to average $51 per barrel in 2017 and $52 per barrel in 2018. West Texas Intermediate (WTI) average crude oil prices are expected to be about $2 per barrel lower than Brent prices in 2017 and 2018.
NYMEX contract values suggest that a range of $39 bbl to $63 bbl encompasses the market expectation for the December WTI prices at the 95% confidence level.
A looming uncertainty regarding the return of normal operations still exists for upstream production, refining, pipeline, and terminal and distribution infrastructure. EIA said it was too early to assess the impact of Hurricane Irma, which made landfall on Sept. 10.
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