U.S. oil production to increase faster than expected as OPEC restricts output

(Bloomberg) – Oil production in the U.S. this year will increase faster than previously expected, helping cushion global supplies as OPEC and its allies restrict output, according to government forecasts.

U.S. crude oil production is set to increase to 13.19 MMbpd this year, up from from a previous projection of 13.1 MMbpd, the Energy Information Administration said in its Short-Term Energy Outlook released Tuesday. Production will increase to 13.65 MMbpd next year, up 1.2% from the previous forecast, the agency said.

While the EIA’s forecasts can change considerably from month to month, the market is watching closely for any indication of whether cuts by OPEC and allies will tighten supplies enough to lift prices.

Despite growing production from the U.S., Guyana, Brazil and Canada, the agency sees global output falling short of consumption by 260,000 bpd this year. That flips to a surplus of 360,000 bpd next year, according to the agency’s estimates.