The U.S. Department of Energy’s latest adjustment to its U.S. crude oil outlook reflects the confounding set of conditions driving the oil markets. Domestic oil production is now expected to fall steadily through the first three quarters of 2016 and then move sideways throughout most of 2017 before recovering.
- Production is expected to fall by nearly 1.5 million barrels per day to only 8.25 million barrels per day in late 2017. This is a roughly 15% decline from the recent peak of 9.7 million barrels per day set in April 2015.
- The current forecast also indicates that production in the second half of 2015 was revised upward by a substantial amount relative to the November forecast.
- Possibly the most important piece of information in the forecast is that the bottom has been pushed back by a full year, from Sep. 2016 to Sep. 2017.