The International Monetary Fund said global crude oil prices have been relatively lower because of the growth in oil supply from North America. With U.S. oil production on pace to eclipse 9 million barrels per day near term, the trend should continue through next year.
Nearly all of the growth in global oil production is coming from the United States and Canada. Combined, North American production growth is around 1.2 million barrels per day from U.S. shale oil and Canadian oil sands. IMF said this growth was spilling over to the global marketplace.
"Crude oil prices have edged lower, mainly as a result of the continued supply surge in North America," it said. (Related Article: Russian Sanctions and the Negative Effect on Global Energy Security)
The U.S. Energy Information Administration said in its market report for April it expected the price for Brent crude, the global benchmark, to average $105 per barrel this year, but fall to $101 in 2014. For West Texas Intermediate, the U.S. benchmark, prices should average $96 per barrel. That's $1 per barrel higher than EIA reported last month, although the administration expects WTI to dip to $90 per barrel next year.
WTI is less than the Brent equivalent because of the increase in production in the United States.
EIA said in its report that a harsh winter season in the Lower 48 states curbed oil production, though a recovery is on its way. Seasonal issues aside, EIA said it expects strong growth in crude oil production from the Bakken, Eagle Ford and Permian shale basins through 2015.
In its short-term report, EIA said U.S. oil production should average 8.4 million bpd in 2014, a 14 percent increase from last year. By next year, U.S. oil production should reach 9.1 million bpd.
WTI was priced at $102.56 per barrel Wednesday, while Brent sold for $107.67. Oil prices this week declined on word export terminals in eastern Libya were set to reopen, ending a long blockade. Prices had rebounded by Wednesday, however, following mixed reactions to EIA's assessment of crude oil stockpiles. (Related Article: U.S. Shale Means Cheap Coal for British Economy)
EIA said domestic crude oil production should move closer to 13 million bpd as the shale boom continues. For the IMF, this trend suggests global oil prices should continue their steady decline. While crude oil prices increase 0.1 percent this year, they should drop by 6 percent in 2015.
The decline means lower energy prices for U.S. consumers, though global economic factors will continue to influence the North American market. Long-term, EIA said U.S. oil imports should continue to decline through 2036 and approach near zero through 2040.