Oil prices hit multiyear highs

Oil prices hit multiyear highs

"Led by US production, particularly the Permian Basin, and now new oil sands projects in Canada, non-OPEC production is forecast to continue growing through the end of 2019", John Conti, the EIA's acting administrator, said in a statement. In the last three years, refiners enjoyed high profits because of relatively cheap crude oil, which is used to make fuels like diesel or gasoline.

The agency also sharply raised its outlook for USA oil production for the coming year it now sees production averaging 10.3 million b/d, or almost 1 mb/d more than in 2017. The rally in oil prices, which are up 59 percent since 2017 lows reached in June, has been driven by a number of forces, including increased demand and continued production cuts.

In addition to the Opec and non-Opec production cuts of 1.8 million barrels per day (bpd) that are due to last until the end of 2018, oil prices have found support from eight consecutive weeks of USA crude inventory drops.

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.

At 08:53 a.m. EST on Friday, WTI Crude was down 0.44 percent at $63.26, and Brent Crude was down 0.14 percent at $68.89, as investors were awaiting U.S. President Trump's decision on Iran and Baker Hughes rig count data.

Goldman Sachs said Wednesday it believed OPEC would try to talk down crude oil prices if Brent tops $70 a barrel. Oil prices are up around 5% already in 2018.


Expectations of another drain on USA crude oil inventories supported a soft increase in oil prices early Tuesday, though a reversal may be overdue.

Oil producers may be enjoying oil prices at $65 to $70, but these price levels are likely to encourage even more oversupply from us shale, Fatih Birol, the Executive Director of the International Energy Agency (IEA), said at an industry event on Friday.

US oil prices hit their highest since 2014 on Wednesday as OPEC-led production cuts and healthy demand helped to balance the market, but analysts warned of possible overheating. Demand is expected to climb an additional 340,000 bpd in 2019 to 20.65 million bpd, the agency said.

The national average price this summer should peak in August at $2.63. 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.

That's bad news for the USA coal industry and Donald Trump ambitions to restore coal's fortunes. On Jan. 9, the World Bank increased its global economic growth estimates for 2018 to 3.1 percent after growth in 2017 was stronger than expected.

"Coal's forecast generation share falls from 30% in 2017 to slightly lower than 30% in 2018 and 28% in 2019". The global benchmark Brent is forecast to average 59.74 dollars in 2018, up from 57.26 dollars estimated in December, and 61.43 dollars in 2019.

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