- U.S. oil production will slow to an average of 11.8 million barrels per day in 2020 and 11 million barrels per day in 2021, the Energy Information Administration announced on Tuesday.
- The production cuts are intended to support demand for the struggling raw materials market and arrive days before OPEC, Russia and other producers meet to negotiate collective pumping cuts.
- President Trump recently threatened to impose “very high tariffs” on Russia and Saudi Arabia if the two nations do not defuse their oil price war and prevent the market from sliding further.
- Watch the Brent Crude Oil Trade live here.
The United States is slashing its planned oil production as demand pools and investors hope Thursday’s OPEC + meeting will bring further easing.
The world’s most traded commodity faces unprecedented pressure as Russia and Saudi Arabia flood the oil market with unwanted stocks. Travel restrictions and home stay orders have kept consumers from enjoying historically low prices.
US production is expected to average 11.8 million barrels per day for the rest of the year, the Energy Information Administration said Tuesday, down from 12.99 million barrels per day. The EIA forecast for 2021 has been revised down from 1.6 million barrels per day to around 11 million barrels per day on average.
The agency sees the price of Brent crude oil – the international benchmark for oil – averaging $ 33 per barrel until 2020, its lowest level in four years and about half of its 2019 average. average will return to $ 46 a barrel in 2021, the EIA added.
“Despite recent news from OPEC + emergency meetings in the coming days to discuss production levels, without an agreement actually being in place, the EIA assumes no further implementation of a OPEC + agreement during the forecast period, “the agency said in its report on Tuesday.
Read more: UBS US equity chief breaks down 5-part strategy for investors looking to dominate the most uncertain profit season in years
The global price war started after Russia refused to cut production and support the commodity market hammered by coronaviruses. Saudi Arabia retaliated in early March by lowering its official selling price and increasing production activity in an attempt to gain market share from Russia. A forthcoming meeting of OPEC, Russia and other producers could lead to a collective reduction in pumping to support demand, but fears of a new price war persist.
President Donald Trump has called on dueling producers to make peace and end their series of price cuts and production increases. In a press briefing on Sunday, the president threatened to impose “very important tariffs” on Russia and Saudi Arabia if the countries could not coordinate a de-escalation of their price dispute.
President Trump foreshadowed the lowering of US production forecasts on Monday, telling reporters that prices were putting pressure on oil companies to slow their pumping.
“The cuts are automatic if you believe in the markets,” said Trump, according to Bloomberg. “It’s supply and demand. They are already reducing and they are reducing very seriously. “
Brent crude was trading at $ 32.12 a barrel at 3 p.m. AND Tuesday, down about 52% from the start of the year.
Now read more coverage of Markets Insider and Business Insider markets:
UBS: nearly $ 1 trillion in mortgage debt may be delinquent this year as credit crisis continues
“The stop is not good for anyone”: Michael Burry, a famous investor of the “Big Short”, unloads on the blockages of the coronaviruses, says that the answer was worse than the disease itself
Goldman’s chief investment officer explained to us how investors can take advantage of the Fed’s huge stimulus – including a strategy that would earn a reasonable 15% in one year