Oil closes up 1% after EIA report

Oil drilling rigs

Oil prices edged higher today, Aug. 8, after the Energy Information Administration (EIA) estimates showed that US oil production would rise this year to record levels. The agency also raised its outlook on crude prices for 2023 and 2024.

International benchmark Brent crude futures for October delivery increased by 0.95%, or 83 cents, to close at $86.17 a barrel, after falling to $83.32 during the day.

West Texas Intermediate (WTI) crude for September delivery rose 1.2%, or 98 cents, to record $82.92 a barrel, after falling to $79.9 during trading.

The EIA expects US oil production to rise to record levels of 12.8 million barrels per day this year, compared to previous forecast of 12.6 million barrels per day.

The monthly report of short-term energy expectations indicated that with the projected increase in productivity at the level of wells and the increase in crude oil prices, productivity in the US will rise to record levels of about 13.1 million barrels per day in 2024.

The US agency also expects an increase in global crude production by 1.4 million barrels per day in 2023, as production outside OPEC increases by 2.1 million barrels per day, to partially compensate for the decline in OPEC production.

The EIA raised its outlook on average price of Brent crude to $82.62 per barrel during the second half of this year, before rising next year to $86.48 per barrel.

WTI crude forecast was raised to $77.79 a barrel in 2023 and $81.48 a barrel the next year.

Meanwhile, Chinese customs data showed that exports fell 14.5% in July on an annual basis, at the largest rate of decline since February 2020. The expected decline was 12.5%.

Imports contracted by 12.4%, more than double the expected pace of decline and far steeper than the expected 5% drop, raising concerns about the extent of the recovery of the second largest economy in the world.

The customs data of the world's largest oil importer showed total shipments of crude fell to 43.69 million metric tons, or 10.29 million barrels per day, in July, after recording 12.67 million barrels per day in June.

Looking forward, the American Petroleum Institute report on oil inventories will be issued later today and the EIA is scheduled to release official data for inventories on Aug. 9. Expectations are that crude stocks will decline by 233,000 barrels, after the record drop during the past week, which exceeded 17 million barrels.