EIA forecasts mostly flat crude oil prices and increasing global production

EIA forecasts mostly flat crude oil prices and increasing global production

The West Texas Intermediate for February delivery increased 0.50 US dollar to settle at 64.30 dollars a barrel on the New York Mercantile Exchange, while Brent crude for March delivery added 0.61 dollar to close at 69.87 dollars a barrel on the London ICE Futures Exchange. 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. The 10 million-bpd milestone previously had not been expected to be reached until the fourth quarter.

OPEC crude oil production averaged 32.5 million barrels per day (MMBPD) in 2017, a decrease of 0.2 MMBPD from 2016, primarily due to the November 2016 OPEC production agreement created to limit OPEC crude oil output to 32.5 MMBPD. Regional summer price spikes can not be precisely predicted.The agency expects gasoline demand in 2018 to total about 9.3 million barrels a day this year, a level that would surpass all-time records set last year. "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. Oil traders have closely watched US crude production to see whether output gains from USA shale formations will surpass the 1.8 million bpd cuts. "Forecast dry natural gas production increases by an average of 2.6 Bcf/d in 2019". That was also close to the previous day's high of $69.37 a barrel, which was the highest level since an intra-day spike in May 2015 and, before that, in December 2014.

The Paris-based IEA, for its part, said in its latest Oil Market Report from December that "On considering the final component in the balance - non-OPEC production - we see that 2018 might not be quite so happy for OPEC producers".

U.S. crude oil production is expected to surpass 10 million barrels per day (bpd) next month, en route to an all-time record months ahead of previous forecasts, the U.S. Energy Information Administration said Tuesday. That was slightly below the five-year average of just over 420 million barrels, the target for OPEC and others cutting output.

The market was bolstered modestly by data showing a sharp decline in USA production last week.

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Because US production increases will need to compete for market share in Asia, the difference between Brent and WTI prices is supported by cost differences to get there.

More immediate price support came overnight from the United states, where crude inventories fell nearly 5 million barrels in the week to January 5, to 419.5 million barrels.

The rally has brought out some concerns that the market could overheat, especially as US production is expected to rise to new records.

Imports into the U.S. Atlantic Coast (USAC) have also been soft recently.

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