Oil Prices Edge Lower as EIA Trims Their Crude Oil Production Forecast

The United States’ Energy Information Administration (EIA) have now reduced their original prediction on the volume of barrels of crude oil to be produced per day for 2016 from what they originally anticipated, with 700,000 barrels expected to be on the market, from a fall of 830,000 barrels.

And the predicted fall in 2017 was hiked by 10,000 barrels per day (bpd) to 420,000 bpd, but US crude production is expected to average 8.31 million bpd next year which represents an increase on last month’s estimate of 8.19 million bpd.

The EIA now said that after a steep drop over the past year in U.S. oil production, an increase in the number of rigs drilling for oil is expected to contribute to a higher output of crude.

So far to day GMT, the price of crude in the New York Mercantile Exchange, has fallen to $42.27 per barrel, a decline of 1.17%, while in the futures market, the ICE index has revealed that a barrel of crude has been reduced by $44.56 , a fall of 0.93%.

Oil prices have been buoyed recently by the OPEC meeting scheduled for the last week in September, where curbing the scale of oil production is expected to be discussed.

OPEC president Dr Mohammed Bin Saleh Al-Sada, who is also Qatar’s Minister of Energy, said that their major oil exporting countries were expecting improvements in the third and fourth quarters of this year, especially for the winter in the Northern Hemisphere on the horizon.

Oil brokers PVM have said in a report complied by Stephen Brennock, that Iraq’s impressive rise in its presence on the oil markets, has stalled for the first part of this year, despite producing a record 4.4 million bpd in January.

According to OPEC sources the report reads, Iraq averaged 4 million bpd in 2015, a figure highlighting a rampant year, despite the ongoing problems in the country, this was an increase of 700,000 barrels per day, and is on target with Baghdad’s vision of producing 6 million bpd by 2020.

Despite failing to build upon this January’s figures, there has been evidence PVM believe that production is becoming more resilient, as demand has held up for Iraqi crude.

This was helped by last year’s decision to split its benchmark Basrah crude stream into Heavy and Light grades, ensuring the Iraqi produce overtook Saudi Arabia as the biggest oil supplier to India in the second quarter, Iraqi crude exports to the US topped 550,000 bpd in May, the highest level since 2012.

PVM warned that worsening economic conditions have also weighed on Iraq’s oil output prospects, with both the central government and the Kurdish region struggling to pay wages amid tumbling oil revenues, and a costly military campaign against jihadists.

Looking to the future, Iraq looks almost certain to inch closer to producing 4.5 million bpd by the end of the year, with increased competition arriving from Iran, Libya and Nigeria, who are all citing an spike in their oil supply.

Due to these production visions, the report opined that for OPEC crude output to surpass 34 million bpd is achievable by early 2017 , leaving the market in a state of oversupply, as OPEC oil is not anticipated to reach this level until the second half of next year.