United States oil output to surpass record earlier than expected

Galtero Lara
Enero 13, 2018

However, the high compliance rate in the latest data includes a sizeable drop in Venezuela's production level of more than 0.2 MMBPD in 2017.

Brent crude futures traded 55 cents lower at $68.71 a barrel at 1253 GMT.

The price of Brent crude oil topped $70 per barrel briefly January 11 for the first time in more than three years. Distillate fuel product supplied averaged about 3.9 million barrels per day over the last four weeks!

At this consumption level, a dollar increase in crude price on a permanent basis will increase the oil import bill by roughly Rs 10,000 crore per annum.

Unlike, OPEC and its allies, the U.S. Energy Information Administration (EIA) forecasts oil prices to average $55/b bl in 2018 as 'c rude oil production from the United States is expected to increase more than in any other country.' However, narrowing U.S. inventories paired with the recent slowdown in field production may keep oil prices afloat especially as the bullish momentum appears to be gathering pace.

West Texas Intermediate is expected to average $4 below Brent this year and next, EIA said, down from the $6 price differential in the fourth quarter of last year as current constraints on transportation capacity between Cushing, Oklahoma, and the Gulf Coast are expected to lessen. "Another variable to watch will be US crude oil production". EIA forecasts the USA average regular retail gasoline price will average $2.57/gallon (gal) in 2018 and $2.58/gal in 2019, slightly higher than the $2.42/gal average in 2017.

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

USA crude inventories fell 4.9 million barrels last week, more than the 3.9-million decline forecast, but bigger-than-expected builds in gasoline and fuel stocks offset that drawdown, the Energy Information Administration reported. These levels of USA crude oil output are expected to continue increasing in 2019 to an average of 10.8 million b/d. EIA expects OPEC crude oil production to increase by 0.2 million b/d in 2018 and by an additional 0.3 million b/d in 2019 as it slowly returns to pre-agreement levels.

Some 800,000 bpd of the projected 1.2 million USA increase from December 2017 to December 2019 is expected to come from tight rock formations in the Permian region in Texas and New Mexico, the agency said. USA crude oil production is expected to continue increasing in 2019 to an average of 10.8 million b/d.

In the Bakken production is expected to average 1.2 million bpd this year and 1.3 million bpd in 2019, up from 1.1 million bpd in 2017.

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.

Iranian Oil Minister Bijan Zangeneh said Tuesday that prices this year were supported in part by OPEC commitments, but also by demand strains from severe winter weather.

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