Markets

OPEC says US oil production to rise again in 2018

OPEC says US oil production to rise again in 2018

Oil prices were roughly flat on Wednesday as weekly USA government data showed a larger-than-expected rise in crude stockpiles south of the border, but substantial declines in fuel inventories as refineries hiked output.

Brent crude futures were at US$64.74 per barrel, up 10 cents, or 0.15%.

USA crude futures fell 0.8% to $60.23 a barrel, with Brent crude down 0.8% at $64.15.

Chinese oil production in January and February slipped to about 3.77 million barrels per day (bpd), while the amount of crude processed by its refineries rose 7.3 percent to 93.4 million bpd, suggesting strong import demand. That was double the rise expected by analysts surveyed by S&P Global Platts. This week, the API reported a draw of 1.262 million in gasoline stockpiles, largely in line with the 1.176-million-barrel draw that analysts had expected.

USA crude-oil production this year is expected to grow by 520,000 barrels a day from December 2017 to December 2018, while the average year-on-year growth is expected to reach 1.04 million barrels a day, mostly coming from shale, the report said.

"The drop in product stocks is significant with refinery utilization up 2% to 90%", said James Williams, energy economist at WTRG Economics.

A multitude of factors were weighing on oil prices, but one factor stands out among the rest, and that's the steadfast climb of United States crude oil production, which for the week ending March 2 increased again, coming in at 10.369 million bpd-close to the 10.7 million bpd figure that the EIA suspects we will see in 2018.




"Prices in the upper half of the oil price-band will encourage increased supply as USA production grows and countries reduce compliance with their production quotas", said Terry Marshall, a Moody's Senior Vice President.

"With the tug of war between the US and OPEC the soap opera continues", said Scott Gecas, senior strategic account executive at Long Leaf Trading Group.

There is a split between Saudi Arabia and Iran on the ideal oil price.

In its closely watched Monthly Oil Market Report published today, OPEC expects non-OPEC supply in 2018 to increase by 1.66 million bpd, compared to expectations of 1.4 million bpd growth from the previous monthly report.

US oil production is expected to top 11 million bpd later this year.

Elsewhere in the energy sector, April natural gas pulled back by 7.5 cents. or 2.7% at $2.711 per million British thermal units.


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