No let-up in crude prices before March

No let-up in crude prices before March

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. Prices were expected to cool off after jumping in mid December when the Forties pipeline system, which carries about 40 percent of total North Sea oil production, was shut down. This year, US crude oil production is seen averaging 10.3 million bpd in 2018, beating a record dating back to 1970.

EIA research shows that USA gasoline prices tend to follow the price of the best grades of oil in Europe, more than they follow the price of the best US crude. In both 2018 and 2019, EIA expects total global crude oil production to be slightly greater than global consumption, with USA crude oil production increasing more than any other country. The term structure of crude oil shows heavy backwardation which points to robust demand and higher prices.

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.

"Inventories ended 2017 9.3 percent above the five-year average, a stark contrast to the 35.6 percent surplus seen at the end of 2016", Oil Futures Editor Geoffrey Craig said in a statement emailed to UPI.

Crude oil production in the United States is expected to increase in 2018 by more than any other country shooting above the 10-million barrel a day mark.

Because crude oil prices are expected to be relatively flat through 2019, USA gasoline prices are also expected to remain near current levels.


WTI and Brent soared to three-year highs on Tuesday before the data on the expectation that crude oil inventories would decline yet another week, along with EIA's updated forecast for oil demand growth that shows an increase over previous figures of 100,000 bpd.

Inventories declined in 2017 for the first time in 4-years as refiners are running at near record rates. Distillates production averaged 5.592 million b/d the week ending December 29, an all-time high for the second period in a row. Although more crude oil export infrastructure has been recently built, USA exporters must still use smaller, less-economic vessels or more complex shipping arrangements, which often add to costs. Production in the US declined this past week, but expectations are for higher volumes in 2018. Analysts warned the market is not paying enough attention to US production increases.

More immediate price support came overnight from the United states, where crude inventories fell nearly 5 million barrels in the week to January 5, to 419.5 million barrels.

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

The rally has brought out some concerns that the market could overheat, especially as USA production is expected to rise to new records.

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