EIA now says US crude oil production is expected to climb to more than 10 million bbls early in 2018, and will then hit an all-time high in 2019, supassing 11 million bopd.
Reuters is reporting:
Much of the production growth will be concentrated in the Permian
Basin, the largest U.S. oilfield stretching across Texas and New Mexico,
said John Staub, the EIA director of the office of petroleum, natural
gas and biofuels analysis. As a result, pipeline capacity constraints
should not be a major limiting factor in starting new production, he
said.
Despite the rising production, oil prices edged higher on Tuesday,
with U.S. crude touching its highest since December 2014. The market was
supported by OPEC-led production cuts and expectations that U.S. crude
inventories have dropped for an eighth week. Oil traders have closely
watched U.S. crude production to see whether output gains from U.S.
shale formations will surpass the 1.8 million bpd cuts.
U.S. demand growth of 150,000 bpd was estimated for 2017, slightly
lower than previous expectations. The agency increased its demand
estimates for 2018 to 470,000 bpd from 410,000 bpd. Demand is expected
to climb an additional 340,000 bpd in 2019 to 20.65 million bpd, the
agency said.
Meanwhile, OPEC's cuts creating havoc among owners of supertankers that shuttle fuel between continents.
Bloomberg is reporting:
The ships’ average earnings plunged last year by more than half to
levels not seen since 2009 and far below what shipping analysts had been
predicting. Now, the producer group’s extension of output cuts
throughout 2018 is adding to the downturn.
“These cuts reduced the number of cargoes from the Middle East to
Asia significantly at a time when a large amount of newly-built vessels
are being delivered,” Olivier Jakob, managing director at Petromatrix
GmbH in Zug, Switzerland, said in a phone interview.
Oil supertankers, known in the industry as very large crude carriers,
or VLCCs, can measure a quarter of a mile in length and haul about 2
million barrels of crude. Since the beginning of 2017, the Organization
of Petroleum Exporting Countries and its allies have sought to reduce
oil production by almost 1.8 million barrels a day, curbing exports and
business for tankers on key trade routes. The group in June plans to
revisit the cuts, which currently run through the end of the year.
Crude exports from OPEC’s Persian Gulf members last month dropped
below 18 million barrels a day for the first time since August,
tanker-tracking data compiled by Bloomberg show. In particular, observed
shipments declined to China and Japan from Saudi Arabia, Iran and the
United Arab Emirates.
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