The U.S. trimmed its 2020 oil production forecast by a modest 70,000 barrels a day even as drillers are scaling back activity to historic lows.
Production will average 11.69 million barrels a day through December, down from a previous forecast of 11.76 million barrels, the Energy Information Administration said on Tuesday. The agency also pared its 2021 output estimate by 130,000 barrels a day to 10.9 million daily barrels.
The agency also revised lower its 2020 U.S. oil demand forecast by about 800,000 barrels a day as coronavirus-related containment measures disrupt travel and economic activity.
The forecast comes as the number of rigs in operation across the U.S. sinks to an all-time low. Explorers including Chevron Corp., Exxon Mobil Corp. and Continental Resources Inc. are enacting sweeping cuts in the country’s biggest shale fields.
The pullback is part of what President Donald Trump described as “automatic” cuts that would be the U.S. contribution to a global deal he brokered with the OPEC+ group to rein in production and end a devastating price war waged between Saudi Arabia and Russia.
So far, U.S. oil output has tumbled by 1.2 million barrels a day since mid-March, according to the EIA, amid a price rout that sent U.S. oil futures spira=lling into negative territory for the first time ever. Prices have since recovered to around US$25 a barrel.
The agency lowered its global oil production forecast for 2020 by 4.2 million barrels a day to 95.19 million daily barrels.
Earlier on Tuesday, Trump said on twitter that rising oil prices will benefit U.S. energy companies, and compared low gasoline prices to a tax cut.