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On Tuesday(December 10th)local time,the US Energy Information Administration(EIA)released a short-term energy outlook report predicting that there will be a slight supply shortage in the global oil market next year.
EIA predicts that by 2025,global oil consumption will be 104.3 million barrels per day,production will be 104.2 million barrels per day,and daily consumption will be 100000 barrels higher than production;Last month,EIA predicted 104.4 million barrels per day and 104.7 million barrels per day,a difference of 300000 barrels between the two.
Media analysis suggests that the EIA’s reduction in global production is partly due to the extension of voluntary production cuts by OPEC+member countries.Last week,eight OPEC+oil producing countries decided to extend their voluntary production cuts of 2.2 million barrels per day,originally scheduled to expire at the end of the year,until the end of March next year.
Investors are closely monitoring the balance of the oil market next year,as weak demand and increased production outside of OPEC may keep oil prices fluctuating within a range.Last weekend,Saudi Arabia lowered the oil prices it sells to Asian buyers by a greater than expected amount,which may exacerbate bearish sentiment.
The latest EIA estimate is that the average price of WTI crude oil in the United States will drop to$69.12 per barrel in 2025,with Brent crude oil at$73.58.A month ago,the EIA provided figures of$71.60 and$76.06.Compared to that,US and Brent crude oil are currently priced at$68.57 and$72.17 per barrel,respectively.
A month ago,the American Petroleum Institute(API),the largest lobbying group in the oil industry,issued an open letter to the elected president after Trump locked in the White House,hoping that Trump could adopt the institute’s policy roadmap,claiming that it could ensure US energy leadership and help reduce inflation.
Afterwards,Trump quickly announced the nomination of oil tycoon Chris Wright as Secretary of Energy and the nomination of North Dakota Governor Doug Burgum as Secretary of the Interior(North Dakota is one of the largest shale oil producing states in the United States).
Kevin Book,Managing Director of ClearView Energy Partners,an energy research firm,stated that Trump’s two choices indicate that the new administration intends to significantly reduce regulation.
Book explained that both Bergum and Wright have connections with smaller independent oil and gas companies,which tend to relax regulations at a deeper level because compliance is more important to them compared to larger companies.
Book believes that the incoming Trump administration is pushing to further increase the US share in the global oil and gas market to counter OPEC and other oil producing countries.
In its latest report,EIA predicts that the oil production in the United States will reach 13.52 million barrels per day in 2025,12.93 million barrels per day in 2023,and 13.24 million barrels per day in 2024.