U.S crude production will dip by as many as 300,000 barrels per day until early 2016 before ramping up again, according to the Energy Information Administration’s latest short-term energy outlook.
Total U.S. crude oil production averaged about 9.6 million barrels per day in May, but production is expected to “generally decline” from June 2015 until early 2016 before growth resumes.
The EIA projects that U.S. crude production will average 9.4 million bpd in 2015 before dropping slightly to 9.3 million bpd in 2016.
The new production figures are 0.2 million bpd higher for 2015 and 0.1 million bpd higher for 2016 than last month’s STEO, primarily due to revisions to actual production data from the first quarter of 2015, the EIA said.
The agency expects Brent crude prices to average $61 per barrel in 2015 and $67 per barrel in 2016, $3 per barrel lower than the it’s previous 2016 forecast.
Brent prices have climbed $5 per barrel since April, the largest monthly increase posted this year.
The gains came despite global inventories growing by over 2 million barrels per day for three straight months.
The EIA said rising Brent prices are tied to “continued signals of higher global oil demand growth, expectations for declining U.S. tight oil production in the coming months and the growing risk of unplanned supply outages in the Middle East and North Africa.”
West Texas Intermediate prices are expected to average $5 less per barrel than Brent in both 2015 and 2016.
The report also highlighted booming natural gas inventories.
According to the report, weekly natural gas inventory builds have surpassed the previous five-year average every week since the start of the natural gas storage injection season in April.
As of the week ending on May 29, working gas inventories grew by 132 billion cubic feet, the largest injection in over ten years.
The EIA projects that gas inventories will hit 3.912 trillion cubic feet at the end of October 2015, or about 115 billion cubic feet over the previous five-year average.
Warmer than usual temperatures along with higher electricity prices are expected to bump up U.S. residential electricity bills by 4.8 percent this summer.