In the June Short-Term Energy Outlook (STEO), we forecast that rising global production of petroleum and other liquid fuels (driven by OPEC, Russia, and the United States) will limit price increases for global crude oil benchmarks Brent and West Texas Intermediate (WTI). Production will likely increase more rapidly than consumption. This ends the large global stock draws seen in the first 2 quarters of 2021. This limits upward crude oil price movement.
At its June 1 meeting, OPEC+ (which includes OPEC members and several non-member countries) reaffirmed its commitment to continued production increases in the coming months. OPEC’s annual production is to average 26.9 million barrels per day (b/d) in 2021 and 28.7 million b/d in 2022. Production of petroleum and other liquids in Russia, an OPEC+ participant, will increase. We forecast annual production will average 10.7 million b/d in 2021 and 11.5 million b/d in 2022.
The price of WTI crude oil increased from $52 per barrel (b) in January 2021 to $65/b in May, driving increases in the U.S. crude oil rig count—an indicator of active U.S. crude oil production capacity that is compiled by Baker Hughes. U.S. crude oil-directed rig count will likely continue rising in response to the rising WTI crude oil price.
Crude oil production in the United States will increase each quarter through the forecast period. This will be averaging 11.4 million b/d in the fourth quarter of 2021 (4Q21). This is the highest level since 1Q 20. Meaning, 11.1 million b/d for all of 2021. U.S. crude oil production will average 11.8 million b/d in 2022.
Source: Graph created by the U.S. Energy Information Administration, Short-Term Energy Outlook (STEO). Data from Baker Hughes Company, as accessed through Bloomberg.