Energy experts have been talking recently about an “era of abundance” in oil and natural gas markets. Skyrocketing production – particularly in the United States – has created a state of global oversupply that prompted oil prices to crash in 2014, and contributed to an extended downturn from which the industry is only now beginning to recover.
U.S. oil production ended the year at a record 9.9 million barrels a day in December and the Energy Information Administration (EIA) expects domestic output will continue to climb through 2018. The EIA forecasts U.S. producers will be pumping 10.5 million barrels of oil a day by the fourth quarter of this year based on a conservative West Texas Intermediate (WTI) price of $56 a barrel. Some forecasters are already betting prices will be much higher, though, because a growing middle class in developing countries is keeping demand high even while production sets records.