U.S. oil output will rise more than 10% by November 2019

Jeannie Matthews
January 13, 2018

This is happening as U.S demand is above average and that in part explains why the supply of oil continues to drain at the fastest pace in history.

-While anti-government protests in Iran and the possibility of USA imposing sanctions again on the country has helped the ongoing crude rally to three-year highs, analysts are cautious as further moves are likely to depend on whether US shale production picks up because of the higher prices.

Among the reasons for that are both foreign-made gasoline and globally supplied crude are routinely imported.

Gasoline inventories rose by 4.1m barrels to near the top of the average range, while analysts expected a smaller 2.6m barrel increase. Finished gasoline inventories were down slightly. These levels of US crude oil output are expected to continue increasing in 2019 to an average of 10.8 million b/d.

The agency attributed most of the recent run-up in price to continuing draws on global inventory levels, and it estimates that global petroleum and other liquid fuels inventories fell an average of 400,000 barrels per day last year, “the first year of annual average draws since 2013.”.

"It's not just USA demand", he said. This demand surge is a global phenomenon.

Oman Minister of Oil & Gas Mohammed Al Rumhy sees oil prices holding around $65-70/bbl for the next few weeks as the region reduces output by 45K b/d, while Russian Energy Minister Alexander Novak warns that ' the market hasn't rebalanced in full ' as Lukoil CEO Vagit Alekperov favors crude stabilizing around $70/bbl.

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The Energy Information Admin is out with its USA inventories report at 10:30 am ET.

Demand for distillates, which include heating oil, jumped almost 7 percent as frigid temperatures gripped the Northeast, where many households heat with heating oil. Pelham junction and tank farm in Pelham, Alabama, U.S., on Monday, Sept. 19, 2016. West Texas Intermediate, the USA benchmark for the price of oil, was up 0.41 percent to $63.83 per barrel. That's close to a record for this time of year.

Brent crude doubled in the past one year and touched United States dollars 70 a barrel mark Thursday, the highest since December 2014. Think of the gravity of that. Just think where prices might be if one of those major producers stopped producing today. Sure, we will see some Improvements in technology and rising prices will get us to produce more oil at some point, but it may take a major price spike before the markets get the message.

On prices, the agency said Brent, the benchmark for North Sea crude oil spot prices, is forecast to average $60 per barrel this year and $61 per barrel in 2019, after experiencing a sharp run up last year.

Bearish signals include a rise in fuel inventories as well as a fall in refined products profits in Asia, which are expected to hamper orders for new feedstock crude.

"Combine the year-on-year production gains with indications that the weather could warm up after next week's cold, and that's why the market is feeling pretty sassy right now that $3 is resistance".

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