Americas News
Higher U.S. Crude Production will Mean Lower Oil Prices
Rising U.S. crude production will push benchmark oil prices down, perhaps to $15 a barrel lower than their current levels in the second half of the decade, Ed Morse, Citigroup's head of commodity research, told the Wall Street Journal.
"It could be a lot lower if the shale revolution continues around the world" he said.
By 2016, the U.S. is projected to reach records for crude production thanks to hydraulic fracturing and horizontal drilling techniques used to extract oil from shale.
Some oil producers are calling for the nation to lift restrictions on the export of crude oil, which has been largely prohibited since 1973.
Ken Cohn, Exxon's vice president of public and government affairs, said last week that the U.S. should "rethink the regulatory scheme" since it is no longer facing a scarcity of oil.
U.S. oil prices stood at about $12 per barrel below the global benchmark Monday, and oil companies could benefit from exporting the oil overseas.
The U.S. Energy Information Administration (EIA) predicts that oil output will level off and then begin a slow decline after 2020, but Morse said he expects output to continue growing through 2020 as more oil is produced from deep water sources in the Gulf of Mexico.
The EIA has raised its projections significantly from figures released in April based on more up-to-date tracking of output, and now expects oil production in 2040 to be 22 percent higher than previously expected.
"Advanced technologies for crude-oil and natural-gas production are continuing to increase domestic supply and reshape the U.S. energy economy as well as expand the potential for U.S. natural-gas exports," EIA Administrator Adam Sieminski said in a statement.
The International Energy Agency (IEA) said last week that global oil demand is on the rise due to economic growth in developed countries, and should increase by 1.2 million barrels per day (mbpd) in both 2013 and 2014.
