US Oil Output Will Hit 11 MMBOPD in 2019

US Oil Output Will Hit 11 MMBOPD in 2019

Traders said relatively weak China December oil data had weighed on prices. The EIA expects global inventories to increase by 300,000 b/d in 2019.

US crude stockpiles dropped to 419.5 million barrels last week, the lowest level since August 2015, according to the Energy Information Administration. While Brent averaged $54 per barrel in 2017, the December average was $64, up $2 per barrel from November, “the highest monthly average since November 2014, ” and only the fourth time in the past 36 months that Brent has averaged more than $60. This condition was most likely the result of over-production that drove prices down over the last five years.

The new strategy has worked, to a certain extent. Since mid-July, Saudi, the largest producer pledged to lower crude oil exports.

The forecast had no impact on the oil market on Tuesday.

Analysts say the potential for robust USA production growth will be a challenge to OPEC and other leading oil exporters such as Russian Federation, which have cut production in an effort to eliminate the worldwide glut. Consumption for all petroleum products is up almost 6 percent from a year ago, according to the Energy Department. In December alone, production fell by an estimated 100,000 barrels per day to around 1.7 million. The agency increased its demand estimates for 2018 to 470,000 bpd from 410,000 bpd. However, this expected economic growth could be curtailed by any number of events. After reaching $70, some profit-taking is expected. "Supply disruptions and falling United States and global inventories have driven crude oil higher", said Ole Hansen, head of commodity strategy at Saxo Bank in a note.


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. "This reduction in the size of excess stocks emerged as a catalyst for higher oil prices".

Members of the Organization of the Petroleum Exporting Countries fear current price gains could prompt US shale oil companies to flood the market.

Production was expected to hit 10.04 million bpd during the first quarter of this year, the agency said in a monthly report.

US crude oil prices closed Wednesday at their highest levels in over three years.

Because US production increases will need to compete for market share in Asia, the difference between Brent and WTI prices is supported by cost differences to get there. Prices rallied after the longest stretch of declines in USA inventories during winter in a decade.

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