Demand is expected to climb an additional 340,000 bpd in 2019 to 20.65 million bpd, the agency said.
That's even with a 2.4% rise in global demand this year and 1.7% in 2019, according to the EIA. According to the Q4 Dallas Fed Energy Survey published at end-December, 42 percent of executives at 132 oil and gas firms expect the US oil rig count to substantially increase if WTI prices are between $61 and $65 a barrel.
WTI the day before rose to its strongest since late 2014 at $64.77.Brent crude futures were at $68.97 a barrel, down 29 cents, or 0.4 percent, from their last close. The narrowing price discount of WTI to Brent in the forecast is based on the assumption that current constraints on the capacity to transport crude oil from the Cushing, Oklahoma, storage hub to the US Gulf Coast will gradually lessen. The U.S. Energy Information Administration this week said it expects Brent to average $60 per barrel for the year, up from the $54 per barrel average for 2017.
EIA research shows that USA gasoline prices tend to follow the price of the best grades of oil in Europe, more than they follow the price of the best US crude.
In its previous forecast, issued a month ago, the EIA saw production growth of 780,000 b/d in 2018.
Crude remain bid as the Organization of the Petroleum Exporting Countries ( OPEC ) and its a llies extend the production cuts from 2017, and oil prices may continue to exhibit a bullish behavior as the group stays on course to reduce supply. Still analysts are cautious of its long-term prospects as USA shale is expected to continue to eat away at OPEC's production cut efforts as prices rise, although that caution appears to be weakening somewhat as prices continue to hold.
"EIA estimates that Opec countries cut crude oil production output in 2017, but those cuts were offset by increased production in non-OPEC countries, especially the United States and Canada", John Conti, EIA acting administrator, said in a statement.
Meanwhile, US production is showing signs of levelling after after huge shale oil output in the past two years. Part of the reason is that demand for diesel, a similar fuel, is increasing. Analysts had expected a smaller, 2.625-million-barrel build.
Worldwide, the EIA sees oil consumption rising by about 1.7 mb/d in both 2018 and 2019, led by stronger demand from China and India. The average production in 2019 will rise 580,000 bpd to 10.85 million bpd, the agency said in its first outlook for next year. The average sale price of gas in 2017 was $2.42/gal.
That's bad news for the U.S. coal industry and Donald Trump ambitions to restore coal's fortunes.