Crude oil prices ended the year above US$50/bbl. Although the annual average West Texas Intermediate (WTI) crude oil price in 2016 was US$43/bbl, down US$5/bbl from 2015, the WTI price ended 2016 at US$53/bbl, US$16/bbl higher than at the end of 2015. Similarly, Brent ended the year up US$17 from the end of 2015, at US$54/bbl, but the 2016 annual average of US$44/bbl was US$8 below the 2015 average.
Despite robust demand for petroleum products, relatively high production and inventory levels provided downward pressure on crude oil prices throughout most of 2016. However, recent agreements to curb production over the next six months within the Organization of the Petroleum Exporting Countries (OPEC) and additional pledges by some key non-OPEC producers put upward pressure on prices at the end of 2016 as markets appear to be anticipating tighter balances than previously forecast.
US highlights for 2016
- US crude oil production was lower in 2016 than in 2015 by more than 500 000 bpd using estimates from the December Short-Term Energy Outlook (STEO). The decrease was driven by reductions in Lower 48 onshore production, with an estimated decline in production from 2015 to 2016 of nearly 700 000 bpd. Despite the decline, production of crude oil is forecast to average 8.9 million bpd in 2016, the second highest level since 1985.
- The Brent-WTI price spread averaged less than US$1/bbl in 2016, significantly below the 2015 average spread of US$3.45/bbl.
- Based on data through September 2016, average US imports of crude oil increased by more than 500 000 bpd from 2015 to 7.9 million bpd, the highest level since 2012. The US imported the three largest volumes of crude oil from Canada, Saudi Arabia, and Venezuela.
- The number of countries receiving US crude oil exports has risen since restrictions on exporting US crude oil were lifted in December 2015. Despite declines in domestic production, total crude oil exports for 2016 were up, with estimates through October 2016 totalling more than 500 000 bpd, an increase of more than 30 000 bpd from the same period in 2015.
International highlights for 2016
- EIA estimates that total OPEC crude oil and other liquids production increased 3% to 39.3 million bpd in 2016.
- At the 30 November OPEC meeting, member countries agreed to reduce production by approximately 1.2 million bpd from an October baseline to lower OPEC's production ceiling to 32.5 million b/d beginning 1 January 2017.
- Non-OPEC countries met following OPEC’s agreement and agreed to cut production by 558 000 bpd, with Russia making the largest cuts of approximately 300 000 bpd.
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