WASHINGTON (Reuters) - U.S. oil companies are expected to reduce oil output temporarily by nearly 2 million barrels per day as lower crude prices force companies to cut back operations, the U.S. Energy Department said on Tuesday.
“The private sector and the free market are driving those cuts,” the department said regarding projections in a U.S. Energy Information Administration, or EIA, report.
The United States, the world’s top oil and natural gas producer, pumped a record more than 12 million barrels per day (bpd) in 2019, according to the EIA.
But global prices for crude have dropped as oil demand has plummeted roughly 30%, or about 30 million bpd, as the coronavirus pandemic slams economies. At the same time, Saudi Arabia and Russia have been flooding markets with extra supply.
The EIA's short-term energy outlook www.eia.gov/outlooks/steo released on Tuesday projected that U.S. oil output will slowly fall through the first quarter of 2021 to just shy of 11 million bpd, or about 1.8 million barrels less than the peak of late last year.
Saudi Arabia, Russia and allied oil producers will discuss stabilizing global oil markets on Thursday, but will agree to deep cuts to their output only if the United States joins with curbs to help prop up prices that have been hammered by the coronavirus crisis.
U.S. President Donald Trump said on Monday the Organization of the Petroleum Countries, of which Saudi Arabia is the de facto leader, had not pressed him to ask U.S. oil producers to reduce their output to support prices. [nL1N2BU2SA] Trump said he thought U.S. cuts were “happening automatically” by private companies.
Trump has said he expects Saudi Arabia and Russia, which can orchestrate statewide production cuts because they have national oil companies, will participate in cutting about 10 million to 15 million bpd.
U.S. Energy Secretary Dan Brouillette will participate on Friday in a virtual G20 ministerial meeting on restoring calm to global energy markets with his counterparts around the world, said Shaylyn Hynes, a department spokeswoman.
Reporting by Timothy Gardner in Washington; additional reporting by Devika Krishna Kumar in New York; Editing by Franklin Paul, Matthew Lewis, Richard Chang and Dan Grebler