U.S. oil output to surpass record earlier than expected

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The West Texas Intermediate for February delivery increased 0.50 USA dollar to settle at 64.30 dollars a barrel on the New York Mercantile Exchange, while Brent crude for March delivery added 0.61 dollar to close at 69.87 dollars a barrel on the London ICE Futures Exchange. 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.

EIA's latest Short-Term Energy Outlook (STEO) from earlier this week estimated that USA crude oil production averaged 9.3 million bpd in the whole of 2017, and 9.9 million bpd in December alone.

For most of 2017, the resurgence of US crude oil production was capping price gains and offset part of the production cuts that OPEC and its Russia-led non-OPEC partners have been implementing since January past year.

Jitters ahead of President Trump's decision on oil-related sanctions for Iran and high global demand pushed oil prices ever close to $70 per barrel on Thursday.

The price for Brent crude oil, the global benchmark, was up 0.44 percent at 9:20 a.m. EST to $68.08 per barrel. "Forecast dry natural gas production increases by an average of 2.6 Bcf/d in 2019".

U.S. oil output to surpass record earlier than expected
U.S. oil output to surpass record earlier than expected

The US Energy Information Administration (EIA) forecast mostly flat crude oil prices and increasing production in 2018 and 2019 in a latest update yesterday.

Inventories declined in 2017 for the first time in 4-years as refiners are running at near record rates. The EIA says it will account for two thirds, or 800,000 b/d of the 1.2 mb/d of oil production growth expected between December 2017 to December 2019. That level would be the highest annual average on record, surpassing the previous record of 9.6 million b/d set in 1970. Production in the USA declined this past week, but expectations are for higher volumes in 2018. Analysts had expected a smaller, 2.625-million-barrel build.

This week, the API is reporting another build in gasoline inventories of 4.338 million barrels for the week ending January 5.

Imports into the U.S. Atlantic Coast (USAC) have also been soft recently.

Bearish signals include a rise in fuel inventories as well as a fall in refined products profits in Asia, which are expected to hamper orders for new feedstock crude.

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