US Oil Output Will Hit 11 MMBOPD in 2019

Crude oil likely to hit $80/bbl mark in 2018; 10 stocks which are likely to get impacted the most

The surge in USA production is being driven by output from shale fields, where drillers use advanced methods like hydraulic fracturing to squeeze oil and gas from tight rock formations.

On a day when USA commodities benchmark West Texas Intermediate (WTI) traded at $63.24, the highest in more than two years, the EIA came out with new production figures.

Higher crude oil prices contributed to the increased gasoline prices in 2017. "But market participants could also use the sharp drop in production as an excuse to buy", said Carsten Fritsch, oil analyst at Commerzbank AG in Frankfurt, Germany. The highest prices were in September.

Carsten Fritsch, analyst at Commerzbank, noted that "In view of sharply falling US crude oil stocks and record-high compliance with the production cuts by OPEC [the Organization of the Petroleum Exporting Countries], market participants are convinced that the market is continuing to tighten".

Oil prices have surged more than 13 percent since early December, and there are indications of overheating.

Traders are watching the surplus on the five-year average in crude oil inventories for signs of balance. Also, the dollar fell in a broad sell-off after a report that China was ready to slow or halt its USA treasury purchases.

"When it comes to hedge fund buying in general the commodities trade is front-and-center and that momentum is building for oil", said Rob Thummel, portfolio manager at energy investment manager Tortoise in Leawood, Kansas.

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.

The price for Brent crude oil, the global benchmark, was up 0.44 percent at 9:20 a.m. EST to $68.08 per barrel.

So far, the analytical community that has repeatedly warned of crude over $60 galvanizing USA shale and ruining OPEC's plans to rebalance the market doesn't think the EIA's finding are any big deal: "Despite the EIA's forecast for record oil production this year and next year again, there's obviously still very healthy demand for crude", said Kyle Cooper, director of research at IAF Advisors. 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.

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