By Dow Jones Business News
NEW YORK--U.S. oil production will grow slightly less than previously expected this year and next, while consumption will remain steady in 2014 and expand in 2015, government forecasters said Tuesday.
This prediction model is worth noting because it nearly triples the market's average yearly gain.
The U.S. Energy Information Administration lowered its forecasts for U.S. oil-production growth in 2014 and 2015 in its short-term energy outlook. The agency reduced its expectations for the country's consumption of oil products in 2014 but raised its forecast for 2015.
The U.S. is likely to produce 8.39 million barrels a day of crude oil this year, down from 8.42 million barrels a day in the EIA's previous forecast but still up from 7.45 million barrels a day in 2013. In 2015, the EIA forecasts production of 9.16 million barrels a day of oil, down from 9.19 million barrels a day previously.
The projected oil production growth is still significant, and the EIA expects rising domestic production to keep benchmark U.S. oil prices at an average of $95 a barrel this year. Currently, U.S. oil is trading at more than $100 a barrel.
The EIA expects consumption of oil products to reach 18.89 million barrels a day in 2014 and 18.99 million barrels a day in 2015, compared with prior forecasts of 18.91 million barrels a day this year and 18.97 million barrels a day in 2015.
U.S. refineries have announced expansions, including condensate splitters and topping refineries, to allow them to process more light crude oil to take advantage of plentiful domestic supplies. Crude-oil inputs to refineries, which reached 15.31 million barrels a day in 2013, are expected to increase to 15.52 million barrels a day this year and 15.61 million barrels a day next year. The current record high is 15.48 million barrels a day, reached in 2004, the EIA said.
The EIA forecasts net imports of oil and oil products to total 25% of U.S. oil demand by 2015, the lowest level since 1971. U.S. reliance on foreign oil peaked at more than 60% of domestic demand in 2005.
The EIA expects net imports to decline from 6.2 million barrels a day last year to 5.47 million barrels a day this year and 4.69 million barrels a day in 2015.
U.S. oil production has been robust because of hydraulic fracturing and horizontal drilling techniques that have enabled energy producers to tap into supplies trapped in shale-oil fields.
U.S. production peaked in 1970, when it reached an annual average of 9.6 million barrels a day, the EIA said.
The agency reduced its expectations for global oil consumption to 91.6 million barrels a day this year and 92.97 million barrels a day in 2015, though consumption is still projected to rise from last year's level of 90.38 million barrels a day.
Consumption among the industrialized nations that comprise the Organization for Economic Cooperation and Development is expected to stay relatively flat, while emerging-market economies such as China will account for much of the consumption growth, the EIA said.
"China is expected to see the biggest jump in petroleum demand this year, with consumption increasing by 400,000 barrels per day," said EIA Administrator Adam Sieminski in a statement Tuesday. "Japan and Europe are forecast to lead the decline in oil demand this year among industrialized countries as a group, with consumption falling by 150,000 and 60,000 barrels per day, respectively."
In 2015, non-OECD demand will overtake flat OECD demand for the first time, exceeding it by nearly 1 million barrels a day, according to EIA estimates.
The EIA said it expects world supplies to increase by 1.5% each year in 2014 and 2015, with most of the growth coming from countries outside the Organization of the Petroleum Exporting Countries.
The Organization of the Petroleum Exporting Countries is expected to reduce its crude production to offset the growth in global supply, the EIA said. The agency slightly lowered its forecasts for OPEC production this next and next.
Write to Nicole Friedman at nicole.friedman@wsj.com
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