Energy Preview: Crude Oil Futures Outlook Seen Flat For This Year

US oil output to top record 11 million barrels per day by end of 2019: EIA

Homes that use heating oil will spend an average of $215 or 17 percent more this year than last, and that's assuming a "normal" winter. While Brent averaged $54 per barrel in 2017, the December average was $64, up $2 per barrel from November, “the highest monthly average since November 2014, ” and only the fourth time in the past 36 months that Brent has averaged more than $60. An oversupplied market contributed to a sharp decline in crude oil prices, which dropped below $30 per barrel two years ago. The global supply of oil exceeded demand by as many as 2 million barrels per day and inventories swelled. And with the crude price up by more than 13 percent since early December, some analysts expect a downward price correction following the recent bull-run. As a result, pipeline capacity constraints should not be a major limiting factor in starting new production, he said. West Texas Intermediate, the USA benchmark, was up 0.66 percent to $62.14 per barrel.

On Tuesday, the EIA boosted output expectations, saying it now sees overall production at record highs, surpassing 11 million barrels per day (bpd) by 2019.

US production for 2017 averaged an estimated 9.3 million bpd, and is estimated to have averaged 9.9 million bpd in December, EIA said. In particular, US crude oil production is expected to increase more quickly than any other country. EIA expects OPEC crude oil production to increase by 0.2 million b/d in 2018 and by an additional 0.3 million b/d in 2019 as it slowly returns to pre-agreement levels.

USA output will be at an all-time high in 2019, surpassing 11 million bpd by the end of that year, a new high for national output, the EIA said in the report. The average production in 2019 will rise 580,000 bpd to 10.85 million bpd, the agency said in its first outlook for next year.

Energy Preview: Crude Oil Futures Outlook Seen Flat For This Year
Energy Preview: Crude Oil Futures Outlook Seen Flat For This Year

Eagle Ford production is expected to be from 1.2 million bpd to 1.3 million bpd this year and next, which EIA said is slightly above the 2017 level.

Oman Minister of Oil & Gas Mohammed Al Rumhy sees oil prices holding around $65-70/bbl for the next few weeks as the region reduces output by 45K b/d, while Russian Energy Minister Alexander Novak warns that ' the market hasn't rebalanced in full ' as Lukoil CEO Vagit Alekperov favors crude stabilizing around $70/bbl. "Supply disruptions and falling United States and global inventories have driven crude oil higher", said Ole Hansen, head of commodity strategy at Saxo Bank in a note.

Phil Flynn, the senior market analyst for the PRICE Futures Group in Chicago, said in an emailed market report that demand strains were offsetting some of the production trends.


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