After averaging an estimated 9.3 million b/d in 2017, USA crude oil production is projected to average 10.3 million b/d in 2018, marking the highest annual average production in the nation's history and surpassing the previous record of 9.6 million b/d set in 1970, according to the Energy Information Administration's latest "Short-Term Energy Outlook". Production in the Federal Gulf of Mexico reached 1.67 million b/d, up 14% from the October 2017 level as the region recovered from Hurricane Nate. The supply side of the oil market is getting stronger. Production is increasing much quicker than demand.
World oil prices are rising on Friday amid investors' expectations of data on the dynamics of the number of drilling rigs in the USA for the week. The new drilling and production techniques have allowed extraction of billions of barrels of oil from shale formations in the United States over the past 10 years, reversing the decade-long trend of declining production and turning the country into an exporter. If the US starts exporting many more barrels of black gold to places like Europe and Asia it would grab market share from Russian Federation and Saudi Arabia. Mind you, the last time the US was producing 10 million barrels was back in 1970!
The US Energy Information Administration issued figures this week, slightly below records set back in November 1970, looking to overtake Russian Federation and Saudi Arabia as major producers. My prediction is, the bull run in crude oil is not over and the price could reach $70 a barrel soon. On the other hands, oil refineries processed an average of 16 million barrels of crude oil last week down from 16.5 million in the previous week.
West Texas Intermediate futures contracts for March delivery settled 23 cents higher Wednesday to $64.73 per barrel.
ICE Brent futures were trading at $69.48/b at 1130 GMT Friday.
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Meanwhile, fishermen and a visiting flock of cormorants took advantage of the rushing, boat-free river to look for lunch. Inside the studios, tables and dressers have been lifted off the floor as water seeps through the walls, the agency says.
Some analysts and industry observers have expressed concern that strong prices could lead US companies rapidly to ramp up production and again flood the market in a move that could trigger another price fall. Yet, the bank said its view was cyclical and sees Brent dropping down to US$60 a barrel by 2020.
Other analysts are not convinced that the markets justify such a high price. Meantime, the dollar stopped losing value, re-moving one of the main positive drivers for oil/fuel prices over the past two months.
America's oil renaissance also has huge implications for Canadian oil producers and the wider economy, which has manifested itself in many direct and indirect ways.
Yesterday still, the EIA released a report defending its numbers to investors.
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