Monday, 22 October, 2018


US oil output to surpass record earlier than expected

US oil output to surpass record earlier than expected US oil output to surpass record earlier than expected
Conrad Doyle | 12 January, 2018, 22:42

West Texas Intermediate (WTI) crude will average 55.33 USA dollars a barrel this year, the EIA said, up from last month's estimate of 52.77 dollars, and 57.43 dollars in 2019. This price difference is expected to narrow from the $6/b average price difference seen in the fourth quarter of 2017 because current constraints on the capacity to transport crude oil from the Cushing, Oklahoma storage hub (the geographic location associated with the WTI price) to the U.S. Gulf Coast are expected to gradually lessen.

Crude oil production from the Organization of the Petroleum Exporting Countries (OPEC) averaged 32.5 million b/d in 2017, a decrease of 0.2 million b/d from 2016. That has changed in the last several years due to the shale revolution, but these projections surpass earlier expectations. That level would be the highest annual average on record, surpassing the previous record of 9.6 million b/d set in 1970.

Only Russia C-RU-OUT and Saudi Arabia PRODN-SA have produced more crude, hitting peak output of over 11 million bpd and about 10.7 million bpd respectively in recent years.

The growth of North American shale production, which caused an estimated 5 percent increase in US crude output in 2017, has rocked the oil industry in the past few years, spurring OPEC and other traditional producers to cut output to trim global inventories.

US output will continue to rise in 2019, surpassing 11 million bpd by the end of that year, the EIA report said. In 2019, crude oil production is forecast to rise to an average of 10.8 million b/d.

As Asian demand for crude oil and petroleum products increase, supply considerations to transport crude oil to Asia are increasingly part of the price formation for global crude oil benchmarks.

Much of the production growth will be concentrated in the Permian Basin, the largest US oilfield stretching across Texas and New Mexico, said John Staub, the EIA director of the office of petroleum, natural gas and biofuels analysis.

Despite the rising production, oil prices edged higher on Tuesday, with USA crude touching its highest since December 2014, closing at $62.96 a barrel.

Sentiment was boosted by a surprise drop in US production and lower USA crude inventories in official data on Wednesday.

Data from the U.S. Energy Information Administration on Wednesday showed that crude inventories fell by nearly 5 million barrels to 419.5 million barrels in the week to January 5.

US demand growth of 150,000 bpd was estimated for 2017, slightly lower than previous expectations.

The EIA increased its estimates for global production and demand in 2018.

USA gasoline stocks climbed by a bigger than expected 4.1 million barrels, EIA data showed.

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