Report: Rising crude oil production should lead to lower fuel prices

U.S. crude oil production is expected to exceed pre-pandemic levels in 2023, and as production and inventories rise, fuel prices are expected to fall, according to the U.S. Energy Information Administration (EIA). The production is expected to average 12.4 million barrels per day in 2023, surpassing the record high set in 2019.

The EIA released Tuesday (Jan. 11) the January Short-Term Energy Outlook which projects that U.S. crude oil production will rise for nine consecutive quarters, from the fourth quarter of 2021 through 2023. Also, OPEC is expected to increase crude oil production to 28.9 million barrels per day in 2023, up from an average of 26.3 million barrels per day in 2021.

“We expect global demand for petroleum products to return to and surpass pre-pandemic levels this year, but crude oil production grows at a faster rate in our forecasts,” said EIA Acting Administrator Steve Nalley. “We expect that as crude oil production increases, inventories will begin to replenish and help push prices lower for gasoline, jet fuel and other petroleum products in the short term.”

U.S. commercial crude oil inventories will rise to 465 million barrels at the end of 2023, which is about 11% higher than the inventories at the end of 2021.

Following are other highlights in the Short-Term Energy Outlook:

• U.S. consumption of solar-generated electricity is expected to rise by 27.3% in 2022 and 25.2% in 2023 as its growth outpaces that of other renewables, according to Nalley. The United States produced 1.5 quadrillion British thermal units of solar power in 2021, an increase of 23.7% from 2020.
• U.S. natural gas production is expected to rise to an average of 98 billion cubic feet per day for the first time by September 2023 and average 98.2 billion cubic feet per day in the second half of 2023. Nalley said global natural gas demand is expected to remain strong, especially in Europe and Asia, and lead to record U.S. liquefied natural gas exports in 2022 and 2023.
• U.S. coal consumption is expected to fall by 2% in 2022 and remain unchanged in 2023. The consumption rose by 14% in 2021 as a result of increased demand for coal-fired electricity. Coal production is expected to rise by 6% in 2022 as U.S. coal inventories are replenished. The inventories are “at near-historic lows,” Nalley said.

Link here for the January Short-Term Energy Outlook.