US sees record 2023 oil output in reversal after cutting outlook

(Bloomberg) —The U.S. raised its forecast for oil production next year, reversing course after five straight months of cuts that stoked concern about a slowdown in output from shale fields.

Production is poised to average 12.34 MMbpd next year, topping the record 12.315 MMbpd set in 2019, according to a monthly report from the Energy Information Administration. That’s an about-face for the government agency following a sharp downward revision in November. The estimate for this year’s output also got a boost.

The forecast could help quell fears that that oil production from American shale fields, one of just a few sources of output growth globally, is decelerating even as crude prices remain well above drillers’ costs to break even. Though concerns about economic growth have kept downward pressure on the market in recent weeks, a slowdown in shale production would add to the risk of tight supplies after Russia’s invasion of Ukraine.

The U.S. estimate was raised as oil rigs rise, climbing by about 30% so far this year, according to Baker Hughes Co. data. Shale producers have expanded drilling at cautious pace to focus on capital discipline and shareholder returns, much to the chagrin of President Joe Biden, who has called on operators to pump more oil.