The Energy Information Administration (EIA) has turned heads with a bearish call on crude oil. The agency now predicts prices will fall to around $50/bbl in early 2026, and US oil production will decline by 400 Mb/d next year. East Daley Analytics is more optimistic, and don’t expect the bottom to fall out of oil markets.
In its August Short-Term Energy Outlook (STEO), the EIA predicts US crude oil production will reach an all-time high of 13.6 MMb/d in Dec ‘25, then decline to 13.2 MMb/d by Dec ‘26. Lower prices, combined with more anticipated supply from OPEC+ members, are behind the bearish outlook. The latest STEO predicts Brent prices will average $51/bbl in 2026.
Market sentiment soured following ‘Liberation Day’ on April 2. WTI prices fell from a $68.24/bbl average in March to $63.54 in April and $62.17 in May. Producers responded by revising down their 2025 guidance, lowering capex budgets and idling more rigs. Prices have rebounded since, with WTI settling at $68.39 in July. Many operators expect to maintain or have even increased their guidance.
However, OPEC+ members in July agreed to accelerate the timeline for unwinding 2.2 MMb/d of production cuts the cartel implemented in Nov ’23. The curtailments, originally scheduled to be fully unwound by Sept ’26, will now end by this September. The decision points to inventory builds into early 2026 and a softer price environment that could linger until late next year, reinforcing a cautious stance on activity and growth.
The latest OPEC+ Monthly Oil Market Report (MOMR) is similar to EIA’s view. The MOMR shows US production averaging 13.2 MMb/d in 2026. OPEC+ frames its outlook around sustained capital discipline, incremental efficiency gains, weaker drilling momentum, and rising associated gas in key shale plays.
In contrast to the pessimism from EIA/OPEC+, East Daley Analytics doesn’t expect production to roll over next year. In the Crude Hub Model, we estimate US crude oil production will average 13.6 MMb/d in 2026, peaking at 13.7 MMb/d in Dec ’26. We base our forecast on the latest NYMEX WTI forward strip.
Even assuming EIA’s price call is accurate, we wouldn’t expect oil production to decline so sharply. We plugged the EIA price forecast into our Production Scenario Tool, and estimate US operators would shed ~40 oil-directed rigs through 2026. Operators would cut 28 rigs from the Permian based on the EIA forecast, plus additional cuts from basins such as the Eagle Ford and Bakken. The Permian generates most US supply growth and therefore carries the heaviest downside leverage if WTI weakens. A reduction of 40 rigs from major oil basins would shed ~366 Mb/d by Dec ’26 in the East Daley model.
Early 2026 guidance from leading producers ExxonMobil (XOM), Chevron (CVX) and ConocoPhillips (COP) points to steady production growth, diverging from EIA’s forecast. The higher WTI futures curve suggests traders are discounting the OPEC+ decision to unwind its production cuts. We will continue to monitor price fluctuations and adjust our models accordingly. – Gage Dwan Tickers: COP, CVX, XOM.
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