EIA increases US oil production forecast and warns that oversupply could lead to a price drop

The Energy Information Administration announced on Tuesday that U.S. crude oil production will be higher than expected this year. However, it warned of a glut in oil prices for the months to come.

According to the Department of Energy's statistics arm, U.S. oil output is expected to average 13,53 million barrels a day in 2013, up from the previous forecast of 13,44 million bpd. Last year's record oil production was 13.23 barrels per day.

The EIA expects that crude oil inventories will rise in the coming months and that this will put downward pressure on oil prices.

The EIA has predicted that the average price of U.S. West Texas Intermediate Crude will be around $65 per barrel in this year. This is a 15% drop from last year. Brent crude oil is expected to average $68.64 per barrel this year, down almost 15% from last.

It said that the revision in EIA's U.S. crude oil production forecast was due to higher output in July than it had estimated previously. EIA has also increased its predictions for offshore U.S. Gulf production, noting some projects are ramping faster than expected.

In his quest to increase domestic production, President Donald Trump is expected to focus on the offshore Gulf. The EIA expects the offshore U.S. Gulf to produce 1.89 million barrels per day (bpd) this year. This is up from their earlier estimate of 1.84million bpd. Reporting by Shariq KHan and Scott DiSavino, New York. Editing by Rod Nickel

(source: Reuters)