U.S. crude production slid in August and is expected to continue dropping through the middle of next year, according to the U.S. Energy Information Administration.
In it’s latest short term energy outlook, the agency estimates U.S crude production dropped by 140,000 barrels per day in August compared to July.
The agency expects crude production to continue falling through August when total production is forecast to average 8.6 million bpd.
U.S. crude oil production is projected to continue declining through mid-2016 before growth resumes again late in 2016, the agency added.
Production is expected to climb back up to an average 9 million bpd in the fourth quarter of 2016.
Crude production is forecast to average 9.2 million bpd in 2015 and 8.8 million bpd in 2016, with both figures coming in at 0.1 million bpd lower than in last month’s STEO.
The agency noted that development at some of the country’s largest shale plays, including the Bakken and Eagle Ford basins, has continued despite last year’s price rout.
“However, WTI prices below $60/b through the forecast period are anticipated to slow the rate of recovery in onshore drilling and well completion totals, despite continued increases in rig and well productivity and falling drilling and completion costs,” the EIA said.
Based on revised data, U.S. crude oil production averaged 9.4 million bpd in the first half of 2015, 0.2 million bpd higher than the fourth quarter of 2014 despite an almost 60 percent fall in the U.S. rig count.
The EIA expects that Brent crude oil prices will average $54 per barrel in 2015 and $59 per barrel in 2016, unchanged from last month’s STEO.
North Sea Brent crude oil prices averaged $47 per barrel in August, a $10 per barrel drop from July.
“This third consecutive monthly decrease in prices likely reflects concerns about lower economic growth in emerging markets, expectations of higher oil exports from Iran, and continuing growth in global inventories,” the EIA said.
Natural gas working inventories were 3.193 trillion cubic feet at the end of August, an 18 percent jump over last year and 4 percent higher than the previous five year average.
The EIA projects inventories will close the injection season at the end of October at 3.840 trillion cubic feet, the third highest end-of-October level on record.
The agency said it expects non-OPEC liquids production to grow by 1. 4 million bpd in 2015 but to remain roughly flat in 2016 “as declining U.S. production is offset by modest growth in other non-OPEC producers.”