For 2019, EIA expects US production to increase to an average of 10.8 million bpd, and to surpass 11 million bpd in November next year.
But on Thursday United Arab Emirates (UAE) oil minister and current Opec president Suhail al-Mazrouei said he expected the market to balance in 2018 and that the producer group was committed to its supply reduction pact until the end of this year.
This came as the U.S. Energy Information Administration (EIA) raised its 2018 world oil demand growth forecast by 100,000 barrels per day (bpd) from its previous estimate.
There are several reasons why oil markets have tightened. The average production in 2019 will rise 580,000 bpd to 10.85 million bpd, the agency said in its first outlook for next year. The Saudi state oil company is expected to debut this year. 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.
The EIA said it expects the share of USA total utility-scale electricity generation from natural gas to rise from 32% in 2017 to 33% in 2018 and to 34% in 2019, as a result of low natural gas prices. However, this expected economic growth could be curtailed by any number of events.
Prices for Brent crude oil futures, the global benchmark for oil prices, have risen by more than 50 percent since mid-2017 and hit $70 per barrel this week for the first since December 2014. After reaching $70, some profit-taking is expected. Brent touched $69.29 in late Tuesday trading, the highest since May 2015. February crude rose 21 cents, or 0.3%, to $63.17 a barrel on the New York Mercantile Exchange, down from $63.35 before the supply data.
Homes that use heating oil will spend an average of $215 or 17 percent more this year than last, and that's assuming a "normal" winter. "It must be kept in mind that rising production from USA shale has the ability to expose oil to downside risks", said Lukman Otunuga, Analyst at futures brokerage FXTM. By many estimates US production is set to take off this year - which is concerning for many other producer nations. For 2019, EIA expects crude oil production will average 10.85 mb/d, as it rises towards the end of the year, topping 11 million barrels a day in November of next year. These liquids are less valuable than gasoline and diesel to refiners and largely are destined to the export market, where they are sold relatively cheaply.
Giovanni Staunovo, a commodity analyst for UBS, told UPI there were a variety of factors apart from Trump's decision that were pulling oil prices into negative territory.