Bank of America Merrill Lynch said the low oil prices were also due to a slowdown in demand.
The EIA forecast US crude production at an average 9.31 million barrels a day in 2017, up 1% from the previous forecast, according to the USA government agency's Short-term Energy Outlook report.
Investors should note that on November 30, 2016, the OPEC cut a deal, per which, the bloc would have cut production by about 1.2 million barrels a day from January (read: How Effective is the OPEC Deal for an Oil ETF Rally?).
A monthly report from the U.S. Energy Information Administration issued Tuesday fed concerns that OPEC's efforts to rebalance the oil market are falling short-just weeks ahead of a key oil-producer meeting set for later this month.
The EIA's Gruenspecht said "higher oil production from the United States, along with rising oil output from Canada and Brazil, is expected to curb upward pressure on global oil prices through the end of 2018". Inventories at Cushing, Oklahoma, the delivery point for WTI and the nation's biggest oil-storage hub, probably increased by 60,000 barrels last week, according to a forecast compiled by Bloomberg. It sees 2018 output at 9.96 million barrels a day, up 0.6% from the previous forecast.
Goldman Sachs told the news agency that the rise is production is primarily driven by shale oil drillers who ramped-up their output rapidly than the conventional producers. Its forecast for total output in 2018 rose to 9.96 million bbl/d from 9.9 million bbl/d.
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However, efforts of OPEC to reduce global oil inventories have been undermined by a surge in U.S. drilling, which has knocked more than 10 per cent off the price of oil in the last month.
"It's pretty apparent that any sustained rise back above $55 will get more and more shale online", said John Kilduff, a partner at energy hedge fund Again Capital LLC in NY.
"We see prices between $45-50 per barrel as fundamentally justified".
In the research note entitled Oil Nearing Capitulation, Goldman Sachs said there was "growing evidence of the ability of USA shale to respond near $50 per barrel and the availability of capital to support such activity", according to MarketWatch.
Top oil exporter Saudi Arabia said on Monday that it would "do whatever it takes" to rebalance a market that has been dogged by oversupply for more than two years.
US crude oil ETF United States Oil (USO - Free Report) and Brent crude ETF United States Brent Oil (BNO - Free Report) are down 17.5% and 15.5% so far this year (as of May 8, 2017).
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