EIA Sees US Oil Output Growth Slowing Slightly; Cuts Price View

U.S. domestic oil output will keep growing next year as slumping crude prices have not discouraged producers in fast-growing shale regions, the U.S. government said on Wednesday, but it trimmed its output forecast by about 100,000 barrels per day.

The U.S. Energy Information Administration also said it expects Saudi Arabia to curb production. But it still cut its forecast for Brent crude prices in 2015 by $18 a barrel from last month's view, to an average of $83 a barrel.

Early Wednesday afternoon, December Brent crude was trading at $80.91 a barrel, down 76 cents.

The EIA now expects U.S. production to rise by 850,000 bpd to around 9.4 million bpd, according to its monthly short-term energy outlook. A month ago it was forecasting a 960,000 bpd rise next year.

It was a rare downgrade from the EIA, which like many forecasters has been consistently underestimating booming U.S. shale growth.

The typically cautious EIA lowered its production forecast by much less than most other analysts. Global oil prices have slumped to four-year lows, raising questions about the sustainability of breakneck growth from a U.S. shale industry that took off about four years ago.

"Lower crude oil prices may curb drilling activity in some lower-producing U.S. basins, but total domestic oil production should continue to increase through next year as crude prices will be high enough to support most drilling" in key shale plays, EIA Administrator Adam Sieminski said in a statement.

A number of brokerages have slashed their forecasts for Brent and WTI prices in recent weeks. Last month, Goldman Sachs analysts said that WTI could fall to $75 a barrel and Brent to $85 a barrel in the first quarter of 2015, both down $15 from their previous forecast. JP Morgan lowered its 2015 forecast by $33 to $82 a barrel and by $33 to $88 a barrel in 2016 .

The EIA added that rising U.S. crude production boosted commercial inventories by 20.2 million barrels in October. That was the biggest increase in oil stocks for that month in 12 years and the fourth largest for October since 1920.

Total U.S. crude oil production averaged some 8.9 million barrels per day (bpd) in October, and monthly average production was forecast to surpass 9 million bpd in December, the EIA said, marking the third successive year of 1 million bpd growth.

Internationally, the EIA said it expects Saudi Arabia to cut production below its current level of 9.5 million bpd to "avoid further downward pressure on oil prices amid high non-OPEC supply growth" but will maintain output above 9 million bpd through 2015.

"Continued growth in global oil supply in the face of weak oil demand will push crude prices lower in the near-term. The average price for Brent crude oil is expected to be about $18 a barrel lower next year than previously forecast," Sieminski added.

(Reporting by Catherine Ngai in New York; Editing by Jeffrey Benkoe, Jonathan Leff and David Gregorio)