The EIA predicts a drop in US oil production by 2026, estimating it at 13.37 million barrels per day (mbpd), down from 13.49 mbpd. The forecast for 2025 remains unchanged at 13.42 mbpd. This change comes as the number of active drilling rigs decreases and oil prices fall. For demand, the EIA has slightly lowered its 2025 estimate for US oil demand from 20.5 mbpd to 20.4 mbpd. Natural gas demand is expected to stay the same at 91.3 billion cubic feet per day. On a global scale, the 2025 oil demand estimate has been adjusted to 103.5 mbpd from 103.7 mbpd, with a stable projection of 104.6 mbpd for 2026. Recently, oil prices have started to recover, driven by global oil demand of 102.60 mbpd compared to a supply of 104.24 mbpd in May 2025. The EIA also forecasts a decrease in US crude oil production from a peak of 13.5 million barrels per day in the second quarter of 2025 to about 13.3 million barrels per day by late 2026. This update from the Energy Information Administration highlights changes in the US production landscape. As drilling slows and prices struggle, lower expectations for future output are understandable. This situation reflects caution among shale producers dealing with tight profit margins and careful capital management. The slight reduction in US oil demand also points to weaker consumption expectations in a sluggish economic climate. While the change is just 0.1 mbpd, it suggests a lack of confidence in near-term demand for industrial and transportation needs. The trends we see are not about large swings; they indicate softer realities becoming more apparent. Globally, the demand revision for 2025, from 103.7 to 103.5 mbpd, indicates that assumptions about post-pandemic strength are being reexamined. Some economies are resilient, while others show signs of demand fatigue, especially in areas where refiners face tightened profit margins and consumers are sensitive to prices. This is not a complete collapse, but rather increasing pressure. The May 2025 forecast is notable because it predicts supply will exceed demand by over 1.6 mbpd. Such an imbalance can create short-term positioning opportunities. When supply outpaces demand and inventories build, downward pressure on prices often follows—not immediately, but frequently enough to notice. The peak of US production at 13.5 mbpd, followed by a decrease to 13.3 mbpd by late 2026, signals a clear trend. Gradual declines like this show that even with cost-effective drilling, natural declines from existing wells cannot be offset entirely. There is still some room for efficiency improvements, but current operational output is already tight. We are observing a slightly softer demand curve compared to a shorter supply curve, with prices fluctuating. This scenario is interesting. Trading volumes often increase when these updates are announced, especially when longer-term futures start to show a more compressed price range. The forward curve may adjust if these trends continue. Calendar spreads in later months may become tighter if output growth slows while stockpiles rise ahead of expectations. This suggests the need for structured strategies, particularly when carrying costs are low and favorable spread roll yields are available. Creating clear, timed setups with tight risk ranges offers new opportunities. Those expecting a quick production rebound may misjudge the challenges that domestic producers face. Meanwhile, global demand is not rising fast enough to absorb the oversupply. We closely watch these baseline revisions—they may not grab headlines, but they influence futures and swaps pricing. Price supports that are usually believed to exist beneath such changes are becoming less stable as short-term surpluses, like the May forecast, emerge. Grounding perspectives in fundamental imbalances is often more reliable than following crowd sentiment. These figures integrate into longer-term models we analyze. Currently, these scenarios do not show strength for this quarter but indicate a tentative holding pattern before seasonal adjustments later in the year. This is when the curve could steepen or invert based on how storage levels compare to refinery inputs in upcoming reports. Situations where demand expectations decrease and supply temporarily misalign may lead to exaggerated price movements in the near term. Reactions can surpass the reality of the situation. A single moment of inventory increase can set the tone for weeks. These numbers matter. They serve as the foundation for positioning—shaping both the upper limits and lower floors of oil prices, tighter now than in previous cycles.

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