The IEA issued its annual World Energy Outlook today and the report forecasts US oil output will expand to 11.6 million barrels a day by 2020 (production reached 9.2 million last year).
IEA Chief Economist Fatih Birol said, ‘We expect in 2015 the US to be the largest oil producer in the world.’ This brings forward the IEA’s prediction that the US will become the world’s top producer, having forecast 2017 with last year’s World Energy Outlook.
US output has soared in recent years thanks to the shale boom, with previously untapped deposits now being exploited by advanced techniques in recovery such as horizontal drilling and fracking.
The EIA stressed that the world was not ‘on the cusp of a new era of oil abundance’, with other countries unlikely to emulate the success of the US in extracting shale oil.
US oil production last month hit its highest level in more than 20 years, according to data from the US Energy Department. Oil data for last week will be released on Thursday by the Energy Department, with inventories expected to rise by 1.62 million, based on a survey of economists by Reuters. Such a result would underline how well-supplied the US is currently, and with production forecast to rise, the fundamentals look bearish.
By mid-afternoon in New York, US crude oil futures for December were down around 2% at $93.20 a barrel. The official daily settlement price was the lowest in five months.
Oil has also been adversely affected by comments from members of the Fed, suggesting that tapering of stimulus is being considered, if not imminent. Richard Fisher, the President of the Dallas Fed, said in an interview that ‘Our balance sheet has become bloated and at some point, we will have to taper back on the pace of purchases.’