Published: Sat, January 13, 2018
Business | By Max Garcia

USA oil output to top Saudi Arabia, Russia in 2019

USA oil output to top Saudi Arabia, Russia in 2019

A weaker dollar generally boosts oil, which is priced in the USA currency. The EIA is forecasting that the average price of gasoline for all of 2018 will be $2.57 a gallon, up from $2.42 a gallon in 2017.

US crude stockpiles fell to 419.5 million barrels last week, the lowest level since August 2015, according to EIA data Wednesday.

EIA forecasts the West Texas Intermediate (WTI) crude oil spot price will average $55/b in 2018 and $57/b in 2019, or $4/b and $5/b, respectively, lower than Brent prices.

The falling price discount of WTI to Brent in the forecast is based on the assumption current constraints on the capacity to transport crude oil from the Cushing, Okla., storage hub to the U.S. Gulf Coast will gradually lessen. "Domestically, things are lining up in terms of moderate prices and increased opportunity for production". Moving that crude oil from the United States to Asia costs approximately $0.50/b more than to ship Brent from the North Sea to Asia. Analysts had expected a smaller, 2.625-million-barrel build.

US crude inventories fell 4.9 million barrels last week, more than the 3.9-million decline forecast, but bigger-than-expected builds in gasoline and fuel stocks offset that drawdown, the Energy Information Administration reported.

Last week, the American Petroleum Institute (API) reported a large draw of 4.992 million barrels of crude oil, along with an increase in gasoline inventories of 1.87 million barrels. The decline was mainly a result of the November 2016 OPEC production agreement that aimed to limit OPEC crude oil output to 32.5 million b/d. OPEC, along with non-members including Russian Federation, have extended through the end of this year a deal to cut supply by 1.8 million bpd. That will be the first time production has reached that level since 1970. Still analysts are cautious of its long-term prospects as U.S. shale is expected to continue to eat away at OPEC's production cut efforts as prices rise, although that caution appears to be weakening somewhat as prices continue to hold.

America's oil production is on track to exceed ten million barrels a day this year, a level not seen since 1970, and will hit an all-time high by the end of the year, according to official estimates released last night.

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