The latest data from the U.S. Energy Information Administration shows that U.S. production expanded from 11,900K to 12,000K in the week ended June 3, the highest reading since April 2020.

Third-quarter oil forecast:

Oil prices have fallen about 20% from their 2022 high of $130.50 as U.S. President Joe Biden takes further steps to combat high energy prices. Crude oil may face further losses in the coming months as rising production complements slowing demand.

U.S. output near pre-pandemic levels

The Biden administration has called on Congress to suspend federal gasoline taxes for the next 90 days while holding "emergency meetings" with refiners to curb energy prices. Developments in the United States, the world's largest oil consumer, are likely to continue to affect crude prices as output approaches pre-pandemic levels.

U.S. weekly crude oil production

Latest data from the U.S. Energy Information Administration (EIA) shows U.S. production expanded from 11,900K to 12,000K in the week ended June 3, the highest reading since April 2020. Organization of the Petroleum Exporting Countries (OPEC) The group will respond to the development after announcing it would raise production in July by 0.648 mb/d following a ministerial meeting on June 2.

However, the recent adjustments to OPEC output may end up being temporary as the group spent much of 2022 increasing output by 0.432 mb/d, . Further increases in U.S. supply could prompt OPEC to revert to its previous schedule, as the group acknowledged that "new activity is expected heading into the northern hemisphere's summer vacation season."

Demand outlook unchanged OPEC production plans

OPEC Monthly for June The Oil Market Report (MOMR) states, “Oil demand growth remains unchanged at 3.4 mb/d in 2022.” The report goes on to say, “World oil demand is expected to average 100.29 mb/d, the same as last month’s estimate. ”

The report also predicts that demand is expected to exceed 0.09 MB/d in 2019. Signs of a slowdown in the U.S. economy could encourage OPEC to cut production later this year, as "current geopolitical developments and uncertainty over the pandemic in the second half of the year continue to pose considerable risks to forecast recovery from pre-pandemic levels."

The efforts of the Biden administration and increased U.S. crude production are likely to continue to weigh on oil prices. Crude oil may face a bear market in the coming months if the global demand outlook worsens.

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