Biden, who expects the oil industry to increase production to depress high oil prices, will be disappointed, and the U.S. Department of Energy has cut its forecast for oil production for this year and next.

On Tuesday, May 10, US Eastern time, the Energy Information Administration (EIA) of the US Department of Energy released its short-term energy outlook for May, predicting that US crude oil production this year will be 11.9 million b / d, down 100000 b / d from the 12.01 million b / d expected in the previous report in April.

Although the latest forecast is still higher than last year's average US oil production of 11.2 million b / d, this is the first time since February that EIA expects to produce less than 12 million b / d this year.

The EIA report on Tuesday also predicted that US crude oil production next year would be 12.85 million b / d, down from 12.95 million b / d in the last monthly report, but higher than the record 12.3 million b / d in 2019.

At the same time, EIA reduced its expected global oil and liquid fuel consumption this year from 99.8 million b / d to 99.6 million b / d, still 2.2 million b / d higher than last year's demand level, and next year's expected global consumption fell from 102.21 million b / d to 101.5 million b / d, still 1.9m b / d higher than this year's expected level.

The cut in global demand forecasts for this year is mainly due to lower consumption growth forecasts in China and the United States, the report said.

This EIA report predicts

The average spot price of Brent crude oil in the second quarter of this year was $106.57 per barrel, lower than the last report of $107.65 per barrel. The expected average price in the third quarter was unchanged at $103.98 per barrel last time, and the average price in the fourth quarter was raised by $1 to $101.66 per barrel.

The average price for this year is expected to be 103.35 US dollars per barrel, roughly unchanged from the last forecast of 103.37 US dollars per barrel, and the expected average price for next year is 97.24 US dollars per barrel, up from 92.57 US dollars per barrel last time.

The report expects a higher increase in natural gas prices:

The report reduces this year's expected US dry gas production from 97.41 billion cubic feet per day to 96.71 billion cubic feet per day, and is expected to rise from 100.86 billion cubic feet per day to 101.71 billion cubic feet per day next year.

This year, the average spot price of natural gas is expected to rise from 5.23 US dollars per million British thermal units to 7.42 US dollars per million British thermal units, an increase of 41.9 per cent. Next year, the expected average price will rise from 4.01 US dollars to 4.74 US dollars per million British thermal units, an increase of 18.2 per cent.

The report points out that the above oil price forecasts are highly uncertain. Actual oil prices will depend largely on the extent of western sanctions on Russia, any possible new sanctions in the future, and actions by independent companies after Russia produces and sells oil to the global market.

Moreover, the May report did not take into account the impact of a possible EU ban on Rosneft. The ban could tighten the market and push oil prices higher than expected. In addition, the report believes that the response of other oil-producing countries to current oil prices in the coming months, as well as the possible impact of macroeconomic conditions on global oil demand, will be important factors in the formation of oil prices.

In terms of natural gas prices, the report's forecasts reflect expectations that natural gas inventories this summer are lower than the average of the last five years, from 2017 to 20221. The report believes that if summer temperatures are higher than expected and electricity demand increases, natural gas prices may be much higher than expected.

On the day of the EIA report, the average price of gasoline in the United States reached a record $4.37 a gallon on Tuesday, while the price of diesel reached $5.55 a gallon, setting an all-time high set in previous days, according to AAA data on Tuesday. This undoubtedly makes it harder for the Biden administration to crack down on inflation fuelled by high oil prices.

In March this year, the US government announced an "unprecedented" large-scale oil reserve release plan: the United States will release 1 million barrels of strategic oil reserves per day over the next six months, releasing a total of 180 million barrels of oil, the largest release since the establishment of the oil reserve program in 1974. Wall Street has since mentioned that if all 180 million barrels are released, the US strategic oil reserve will fall to its lowest level since 1984.

On Thursday, the United States launched a program to replenish emergency oil reserves, announcing that it would invite tenders to buy 60 million barrels of oil this autumn. The volume of the purchase is 1/3 of the 180 million barrels of crude oil that Biden announced in March. According to the U.S. Department of Energy, one of the purposes of the procurement is to deal with the rising energy prices caused by the conflict between Russia and Ukraine.

Us officials said on the same day that the Department of Energy plans to change existing rules to allow "competitive fixed prices" in bids, rather than linking procurement prices to market prices. The timing will depend on expected market conditions, with a focus on when oil prices and demand are expected to fall sharply.