U.S. oil production fell sharply in 2020, but the Energy Information Administration is expecting it to pick back up and even set new records in just two years, it said in its much-anticipated annual energy outlook (AEO2021).
According to the EIA, U.S. oil production will surpass in 2023 its previous annual average of 12.25 million barrels per day, achieved in 2019.
In 2020, U.S. oil production had reached a high of 13.1 million bpd on average for week ending March 13. But the overall annual average for the pandemic year was much lower after oil production fell sharply in August, briefly dipping below 10 million barrels per day.
U.S. energy consumption, however, will take years to return to 2019 levels—eight years to be exact. The EIA notes, however, that “that projection is highly dependent on the pace of U.S. economic recovery.”
Electricity demand, according to the AEO2021, is expected to return to 2019 levels by 2025—again, a slower recovery than U.S. oil production, which also has export markets to draw on.
That U.S. production could return to 2019 levels is remarkable, considering that domestic consumption will take years longer to recover.
Currently, U.S. oil production, according to the EIA is averaging 10.9 million barrels per day—2.2 million bpd lower than the highs reached in March of 2020.
The number of active drilling rigs is on an upward trajectory, but overall, the number of active drilling rigs is still 400 below where it was just one year ago today.
Meanwhile, OPEC’s production is also down by millions of barrels per day from 2019 levels as part of its coordinated production cuts.