By Jessica Resnick-Ault
NEW YORK (Reuters) - U.S. crude oil production is expected to surpass 10 million barrels per day (bpd) next month, en route to an all-time record months ahead of previous forecasts, the U.S. Energy Information Administration said Tuesday.
Production was expected to rise to an average 10.04 million bpd during the first quarter of this year, the agency said in a monthly report. The 10 million-bpd milestone previously had not been expected to be reached until the fourth quarter.
That would match the all-time monthly record of 10.04 million bpd set in Nov. 1970; oil production declined after that as the United States increasingly relied on imported crude. That has changed in the last several years due to the shale revolution, but these projections surpass earlier expectations.
The monthly average for February is expected to surpass 10 million bpd, said Tim Hess, the lead analyst for the report. That will be the first time production has reached that level since 1970.
Only Russia and Saudi Arabia have produced more crude, hitting peak output of over 11 million bpd and about 10.7 million bpd respectively in recent years.
The EIA revised its production growth forecast for 2018 sharply higher to 970,000 bpd from 780,000 bpd in its previous outlook.
U.S. output will continue to rise in 2019, surpassing 11 million bpd by the end of that year, the EIA report said. The average production in 2019 will rise 580,000 bpd to 10.85 million bpd, the agency said in its first outlook for next year.
"The major risk factors would be more global in nature, rather than anything specific domestically," EIA acting administrator John Conti said on a conference call. "Domestically, things are lining up in terms of moderate prices and increased opportunity for production."
Much of the production growth will be concentrated in the Permian Basin, the largest U.S. oilfield stretching across Texas and New Mexico, said John Staub, the EIA director of the office of petroleum, natural gas and biofuels analysis. As a result, pipeline capacity constraints should not be a major limiting factor in starting new production, he said.
Despite the rising production, oil prices edged higher on Tuesday, with U.S. crude touching its highest since December 2014, closing at $62.96 a barrel.
The market was supported by OPEC-led production cuts and expectations that U.S. crude inventories have dropped for an eighth week. Oil traders have closely watched U.S. crude production to see whether output gains from U.S. shale formations will surpass the 1.8 million bpd cuts. [O/R]
U.S. demand growth of 150,000 bpd was estimated for 2017, slightly lower than previous expectations. The agency increased its demand estimates for 2018 to 470,000 bpd from 410,000 bpd. Demand is expected to climb an additional 340,000 bpd in 2019 to 20.65 million bpd, the agency said.