US oil production to drop significantly next year- EIA forecasts

OPEC's failure to reach a consensus among its member states on production cut initially had post-effects yesterday. The members were not able to limit production levels, which suggests that there is  likeliness for continued high production, which adds to the supply glut in the market.

Undoubtedly the oil price was above all long term outlook on oil market which allowed the prices to recover somewhat post the last trading course.

US EIA confirmed that the oil output in US seems strong at current edge, partially due to increasing production in Gulf of Mexico, hence rose its production estimate for current year modestly.

Nonetheless, it expects US production to fall sharply on average next year, namely by a good 500,000 barrels per day; from this April's high to the anticipated low next September, production is even expected to decrease by more than one million barrels per day. 

"This will reduce the oversupply during the course of next year, which we believe will spark recovering prices. No doubt the short-term trends are also being dictated by the current "status reports" for US crude oil stocks", opines Commerzbank.