The U.S.' Energy Information Administration revised down its crude oil forecast for 2019 by $11 per barrel, according to its Short-Term Energy Outlook (STEO) report for December released on Tuesday.
The price of the international benchmark is estimated to average $61 a barrel next year, down from the previous forecast of $72 per barrel in November's STEO.
American benchmark West Texas Intermediate (WTI) is now forecast to average $54 per barrel in 2019 compared to the average of $65 a barrel in last month's report.
"Crude oil production from the world’s three largest producers -- the United States, Russia, and Saudi Arabia -- were at or near record levels in November," the report said.
The record high production from those countries increases the glut of supply in the global oil market.
Although the U.S. began on Nov. 5 to reimpose sanctions on Iranian oil exports, Washington granted waivers to eight countries to continue buying oil from Iran for six months -- a move that adds more supply to the market.
On the demand side, "concerns about the pace of global economic growth in coming months have led to related concerns about the pace of oil demand growth," the EIA said.
To balance supply and demand in the oil market, OPEC and its allies agreed on Dec. 7 to cut their total production by 1.2 million barrels per day (mbpd).
"The cuts were in response to increasing evidence that oil markets could become oversupplied in 2019," according to the EIA.
"EIA expects that the magnitude of the recent price declines combined with the OPEC production cuts will bring 2019 supply and demand numbers largely into balance," it added.
- U.S. output forecast unchanged
The EIA, on the other hand, kept its U.S. oil production estimate for 2018 and 2019 unchanged in its December STEO report from the previous month.
The administration expects crude oil production in the U.S. to average 10.9 mbpd this year and 12.1 mbpd next year.
Crude output in the country averaged 9.4 mbpd in 2017.
U.S. crude oil production climbed to a record high level of 11.7 mbpd for the week ending Nov. 9, and remained unchanged at this level since then, according to the EIA data.
This level has pushed the U.S. to the top global spot for crude oil production, ahead of Russia and Saudi Arabia.
By Ovunc Kutlu