US Hikes 2017 Output Forecast As Firms Prepare To Raise Spending

US crude output has already risen by 200,000 b/d since bottoming out at 8.58mn b/d in September. Add in NGLs and the gains are 300,000 b/d. With last week’s Opec agreement to cut having, seemingly decisively, boosted crude prices above $50/B further rises are likely in the pipeline.

The outlook for 2017 US crude output was looking bleak midway through 2016 as oil majors and oilfield services firms cut back on spending. But with oil prices now above the $50/B mark, the EIA has raised its forecasts for next year’s output.

The US government agency’s latest Short Term Energy Outlook, released 6 December, forecasts crude output breaking 9mn b/d be the end of 2017 (9.004mn b/d for December 2017) for the first time since it began monthly 2017 forecasts at the beginning of this year.

For 2017 as a whole its latest forecast of 8.78mn b/d is almost 600,000 b/d higher than that made just six months ago. Current futures prices have WTI at just under $55/B in December 2017. Breakeven prices in the prolific Permian Basin in Texas and New Mexico are substantially lower than unconventional producers elsewhere in the US, with $35/B still a profitable price for many Permian operators.US crude, having risen above 9mn b/d for the first time in 28 years in September 2014, fell back below this level in April this year on the back of a more than halving in oil prices. (CONTINUED - 1362 WORDS)

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