OREANDA-NEWS. US crude production will not rise above the 2015 levels in the next decade despite a projected significant rebound in oil prices, the US government energy forecasters projected today.

US crude output is expected to decline to 8.84mn b/d this year and 8.55mn b/d in 2017, rebound to 9.38mn b/d in 2020 and then increase slowly to 9.43mn b/d in 2025. The numbers are based on the reference case scenarios in the US Energy Information Administration's (EIA) Annual Energy Outlook. The agency will release its full set of annual projections on 7 July.

Onshore output from the continental US should fall by 16pc in 2016-17, before reversing trend and growing at an average rate of 2.2pc/yr between 2018-25. By contrast, offshore production could grow strongly in 2016-17, but tflatten in the next few years before production starts to fall in 2022.

The overall crude output growth rate is projected to increase after 2025, lifting the estimated production to 11.26mn b/d in 2040.

The outlook projects the West Texas Intermediate (WTI) price at $36.91/bl this year and $48.08/bl in 2017, with subsequent increases to $71.12/bl in 2020 and $85.41/bl in 2025, all in 2015 dollars. That compares with $48.67/bl in 2015.

The EIA expects the Brent price to average $36.84/bl this year and $48.08/bl next year. But Brent is expected to swing to a premium to WTI through 2040. The projected Brent-WTI premium reaches $5.45/bl in 2020, $6.18/bl in 2025 and $7.11/bl in 2040. The premium averaged $3.65/bl in 2015.

The outlook projects US oil exports at 460,000 b/d this year, up from about 400,000 b/d last year. Congress lifted restrictions on US crude exports in December 2015. Exports could rise to 630,000 b/d in 2020 and stay at that level through 2030, according to the outlook.

Net imports are expected to rise to 7.76mn b/d in 2017, then decline to 6.97mn b/d in 2020 and 6.95mn b/d in 2025, compared with 6.88mn b/d in 2015.

US oil demand is projected to increase by an average of 0.7pc between 2016-20, reaching 20.11mn b/d in 2020 from 19.42mn b/d in 2015. Transportation demand is projected to fall starting in 2019, which will push the overall consumption lower every year after 2021.

The projected average annual decline in transportation demand of 0.4pc between 2016-40 reflects fuel efficiency gains in light-duty vehicles, the EIA said.

The early release of the EIA's annual outlook contains two sets of projections to account for the significant effects the US administration's Clean Power Plan for reducing CO2 emissions from power generation may have on coal, natural gas and renewables.

The projected effects on oil supply and demand are insignificant and largely reflect estimated variations in the already small petroleum use in power generation and output in the Appalachian shale formations. The numbers above reflect the scenario assuming the Clean Power Plan is in effect. The EIA outlook does not account for the effects of the proposed methane reduction targets in the oil and gas sector, since the administration has not finalized them.

The US under either scenario will become a net energy exporter by 2030, the EIA projects. The EIA expects US natural gas prices to stay below $5/mmBtu for most of its forecast period through 2040. Natural gas production will increase with or without the Clean Power Plan, and net exports could absorb 18pc of US natural gas supply by 2040.