The EIA expects the US to import more oil that it produces this year after a short stint as a net exporter

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The EIA expects the US to import more oil that it produces this year after a short stint as a net exporter

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oil rigREUTERS/Jim Urquhart
  • The Energy Information Administration forecasts that in 2020, the US will import more crude oil and petroleum products than it exports, it said in a Tuesday report.
  • It expects that US crude oil production will fall to 11.8 million barrels per day in 2020, down 500,000 bpd from 2019. In 2021, the administration expects that US crude production will fall by another 700,000 bpd.
  • "Net crude oil imports are expected to increase because as U.S. crude oil production declines, there will be fewer barrels available for export," the administration wrote in the report.
  • Watch oil trade live on Markets Insider.
  • Read more on Business Insider.

The US will likely return to being a net importer of crude oil and petroleum products this year, according to a Tuesday report from the Energy Information Administration.

The EIA forecasts that the US will become a net importer in the third quarter of 2020 for the first time since 2019. It expects the US will remain a net importer in most months through 2021.

The agency also forecasts that US crude oil production will fall to 11.8 million barrels per day in 2020, down 500,000 barrels from 2019. In 2021, the administration expects that US crude production will fall by another 700,000 barrels per day.

"This is a result of higher net imports of crude oil and lower net exports of petroleum products," the administration wrote in the report. "Net crude oil imports are expected to increase because as U.S. crude oil production declines, there will be fewer barrels available for export."

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The slashed outlook comes amid an uncertain time for the oil industry, as the coronavirus pandemic craters demand while a price war between OPEC and its allies has boosted production. If realized, the forecast crude oil production decline in 2020 would be the first annual drop since 2016, according to the report.

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"Typically, price changes impact production after about a six-month lag," the administration said in the report. "However, current market conditions, combined with the COVID-19 pandemic, will likely reduce this lag as many producers have already announced plans to reduce capital spending and drilling levels."

The EIA said that Brent crude oil prices averaged $32 per barrel in March, a $24 decline from February and the lowest monthly average since January 2016. For the year, the group expects Brent crude to average $33 per barrel, down from an average of $64 per barrel in 2019.

The slump in crude oil prices will translate into cheaper gas, usually a good thing for US consumers that President Trump has recently had to flip on, calling for OPEC and allies to agree on production cuts. The EIA forecasts that US regular gasoline prices will average $1.58 per gallon for the April-September summer driving season, down from an average of $2.72 per gallon last year.

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"The lower forecast gasoline prices reflect lower forecast crude oil prices and significantly lower gasoline demand in the second quarter of 2020 driven by COVID-19 travel restrictions and disruptions to domestic economic activity," according to the report.

For the entire year, the EIA expects gas prices to average to average $1.97 per gallon. In March, the average gasoline price fell below $2 per gallon for the first time since 2016.

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