US EIA Lowers 2016 Crude Oil Production Forecast

$USO

The US government lowered its Y 2016 US Oil production forecast Tuesday, as it expects output declines to start in 2-H of this year of this year through early Y 2016 before it resumes.

The forecast saw production falling in 2016 overall, compared with the increase for next year foreseen in the EIA outlook last month, as the Oil industry reels from the worst rout in Crude Oil prices since the financial crisis.

In its short-term energy outlook, the US Energy Information Administration raised its 2015 US Crude Oil (NYSEArca:USO) production growth forecast to 720,000 BPD from 530,000 BPD, but lowered its Y 2016 US production by 160,000 BPD, a 20,000 BPD growth previously.

It raised its 2015 US Oil demand growth forecast to 380,000 BPD vs 340,000 BPD seen last month, and left unchanged its Y 2016 demand growth forecast to 70,000 BPD.

Since last June, US producers have moved quickly to a near 60% drop in prices by cutting spending, eliminating jobs and idling more than 50% of the country’s Oil rigs.

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While production has been “more resilient to lower Crude prices than many had expected,” May’s estimated US Oil output was the highest for any month since Y 1972, EIA Administrator Adam Sieminski said in a statement.

However, “production still is expected to decline in 2-H of this year,” he added.

The EIA’s report comes after its drilling productivity on Monday showing that the largest US shale Oil plays are forecast to deepen for the 3rd consecutive month in July, even as rig productivity remains high.

HeffX-LTN Analysis for USO:	Overall	Short	Intermediate	Long
HeffX-LTN Analysis for USO:	Neutral (0.24)	Neutral (0.09)	Bullish (0.46)	Neutral (0.17)