Crude Dips After EIA Forecasts Increased Oil Production For A Decade

The EIA's annual energy outlook has something for everyone as it attempts to forecast energy markets out to 2040. For the bears, US crude oil production is expected to rise (even more than they had forecast last year - before the price collapse) as it seems, according to EIA the only thing more stimulative for oil production than high prices is low prices. For the bulls, EIA exuberantly forecasts prices soaring to over $240 by 2040 in a high growth environment. Crude prices are dipping modestly from their ramp highs.

Production will keep rising...

[5]

As Reuters notes, [6]

The U.S. government on Tuesday forecast domestic crude production will rise even more than expected a year ago, undeterred by the worst price rout since the financial crisis.

 

U.S. crude oil production will peak at 10.6 million barrels per day in 2020, a million barrels more than the high forecast a year earlier, according to the annual energy outlook by the Energy Information Administration, the statistical arm of the U.S. Energy Department.

 

Crude production will then moderate to 9.4 million bpd in 2040, 26 percent more than expected a year ago, the agency said.

 

The reference case in the report forecasts Brent prices of $56 a barrel in 2015, rising to about $91 a barrel in 2025, $10 a barrel less than levels expected a year ago. The report uses the 2013 value of the dollar as its measure.

 

Despite lower prices, higher production will result mainly from increased onshore oil output, predominantly from shale formations, the agency said.

 

Onshore production in lower 48 states is expected to reach 5.6 million bpd in 2020 in the reference case, 34 percent more than expected a year ago.

 

The agency expects a faster oil drilling pace this year than it saw last year.

So "obviously" prices will keep rising...

[7]

Why should we believe the EIA? Because they so accurately predicted [8]the 2014 price crash which wiped out more than 50% from the price of a single barrell of oil in months.

Oh wait, they didn't.

[9]

Annotated EIA report here:

EIA Outlook 2015 [10]

*  *  *

Full EIA report below...

EIA 2015 Outlook [11]