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US Oil Production to Hit New Record in 2018

US Oil Production to Hit New Record in 2018

However, the bulls that are riding heavily on this recovery have strong reasons to stick to their stance. We're just looking for a short-term price adjustment.

Crude edged lower amid predictions of a steep hike in USA crude output this year. Even at these forward levels, the price is above the cost of production for a lot of shale producers. WTI also marked a 10-day drop earlier in the day of $62.84 a barrel and recorded its 3-year intraday high of $64.89 on Tuesday.

OPEC and a number of non-OPEC countries, including Russian Federation, cut a deal in November 2016 aimed at decreasing global oil production by 2 percent.

"I think one of the things we need to define in the next few months, before we meet in June, is what is the real target more precisely, and that is work that still needs to be done, and we still need to reach a consensus".

Atkinson said that given the recent rally in oil prices, the IEA was expecting a "wave of new production" from the U.S.in the coming months. This is more than the reduction in inventories announced on the eve of the American Petroleum Institute (5.12 million barrels), and more experts forecast (3.5 million barrels).

"Shale producers in the United States have managed to lower their breakeven costs by 30-50 per cent in 2015-17, by improving technology and efficiency and as oil field service providers offered deep discounts on rigs and crews to retain their share of a shrinking market".

Russia-a heavyweight non-OPEC producer with 256bn in reserves-and Saudi Arabia-the de-facto leader of OPEC-recently led the way for OPEC members and non-OPEC producers to cap off high oil prices.

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As you remember, back in 2013 and 2014 inventories were low, prices were above $100 barrel and OPEC made a decision to flood the oil market to put the US shale oil industry out of business.

According to the U.S. Energy Information Administration, U.S. crude production rose to 9.75 million barrels per day (bpd), up from 9.49 the previous week.

U.S. production is expected to break the 10m bpd soon.

Demand growth for 2018 is estimated at 1.3m bbl/day, said IEA, below its projections of 1.6m bbl/day for 2017, with higher prices, shifting China oil use patterns, weaker OECD nations demand and a switch to natural gas in some non-OECD countries all contributing to slower demand expectations. The oil prices have jumped over 40% since the first announcement of these production cuts. OPEC's reluctance to cut output was also seen as a key reason behind the fall.

But Rashidi believes that demand is still too high to suggest that more USA exports could hurt OPEC members' share of the market.

Brent crude, the global benchmark, pared losses, trading at $69.30, down 8 cents a barrel, by 11:26 a.m. EST (1626 GMT), after earlier slipping to $68.80 a barrel earlier in the session. Mr. Falih said the group was cutting more oil than agreed-though its efforts have been helped along by the collapse of OPEC member Venezuela's economy and energy industry.

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