EIA scales back US crude production forecast

The US Energy Information Administration (EIA) has scaled back its US crude production forecast slightly from previous expectations.

In its latest monthly Short-Term Energy Outlook (STEO), released on July 8, the agency noted that declining oil prices had contributed to US producers slowing their drilling and completion activity this year. As a result, the EIA now anticipates that US crude production will decline from an all-time high of 13.41mn barrels per day (bpd) in the second quarter of 2025 to 13.26mn bpd by the fourth quarter of 2026.

In its previous STEO, released in June, the agency had forecast that crude production would hit an all-time high of 13.52mn bpd in the second quarter of this year before dropping back to around 13.34mn bpd by the fourth quarter of 2026. At the time, the EIA said active rig counts in the US had fallen by “much more” than it had anticipated in its May STEO. The latest STEO shows that this trend of reduced rig activity has continued, leading to further reductions in the EIA’s forecast. Indeed, the latest Baker Hughes rig count, released on July 3, showed that active US oil rig counts had declined by seven compared with the previous week. This marked the tenth consecutive week of US oil and gas rig counts declining – the first such streak since July 2020 according to Reuters. Oil rigs dominated the decline, with natural gas rig counts only dropping by one compared with the previous week. The total active oil rig count stood at 425 as of July 3, down from 432 the previous week and 479 at the same time a year ago.

If these reductions to rig counts continue, the EIA will have further downward revisions to make to its forecast in the coming months. On an annual basis, the agency now anticipates that US crude production will average 13.37mn bpd in both 2025 and 2026. Previously, it had forecast that output would average 13.42mn bpd in 2025, before dropping back to 13.37mn bpd in 2026. In its May STEO, the EIA had projected that output would keep rising beyond 2025, reaching 13.49mn bpd in 2026. The change in assumptions over just two months shows the impact that oil price weakness is having on US producers.