Published: Mon, January 22, 2018
Money | By Armando Alvarado

US Could Become World's Biggest Oil Producer in 2018

US Could Become World's Biggest Oil Producer in 2018

"Prices may go down again; we monitor the situation". The investment bank sees Brent and West Texas Intermediate average price forecasts at Dollars 62 and USD 57.5 per barrel for 2018, respectively.

USA oil companies could make "decent" returns at $53-a-barrel oil and could remain profitable at $60 a barrel even if oilfield service costs rise 15 percent this year, the Organization of Petroleum Exporting Countries said in its monthly oil-market report, citing research by JP Morgan Chase & Co.

Overall non-OPEC supply is expected to increase by 1.7 million barrels per day in 2018, up from 0.7 million bpd a year ago.

Meanwhile, gasoline reserves in the country increased by 3.62 million barrels, distillates - decreased by 3.89 million barrels. The government of the largest OPEC producer will benefit from a high oil price during the privatization.

This year, USA crude oil production is seen averaging 10.3 million bpd in 2018, beating a record dating back to 1970.

The Venezuelan crisis adds some fuel to the fears from within OPEC that their production cuts are biting faster than expected, which could make the inventory drawdowns overshoot at some point. Consequently, the oil cartel, along with Russian Federation and other Non-OPEC members, chose to extend the output reductions until the end of 2018.

Rising US Shale Production - A Threat?

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The exact mechanism for cooperation next year has not yet been decided, Falih said, but if oil inventories increase in 2018 as some in the market expect, producers might have to consider rolling the supply cut deal into next year. 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).

"While it's great to be adding shale, it's coming at the expense of deepwater projects". Consequently, the United States oil output has grown sharply over the last few months.

"Short-cycle production from the reacting to rising prices and we have raised our forecast for crude oil growth there in 2018" from 870,000 bpd to 1.1 million bpd, the association said in its latest Oil Market Report.

North America continues to strengthen as a player in the global crude oil markets, with USA supply beating all expectations in 2017 and set to outstrip Saudi Arabia this year, the International Energy Agency (IEA) said on Friday.

The sudden tightening also raises fears that OPEC is handing over too much room for rival producers, i.e., us shale.

Positive news has already accounted by the market and the likelihood of price correction is growing. "Relentless growth should see the US hit historic highs ... provided OPEC and non-OPEC restraints remain in place", the IEA predicted. OPEC and its allies also want to find a way to wind down their limits on production- which are costing these nation's millions of dollars every day as prices rise-without spooking investors. Since then, US crude storage has shrunk from 31 to only 24 days of coverage. For 2019, EIA expects U.S. production to increase to an average of 10.8 million bpd and to surpass 11 million bpd in November next year. At the moment, Russia's output is cut by 300,000 bpd. From a May 2017-high of 520 million barrels to 420 million barrels in January, there has been a significant decline in crude inventory.

"The oil market is volatile". February heating oil shed 0.2% to $2.058 a gallon, with prices down about 1.3% for the week. Feel free to create our own forecast for oil prices by altering the various demand and supply drivers using our interactive platform.

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