EIA Forecasts Record US Crude Production in 2018

EIA Forecasts Record US Crude Production in 2018EIA Forecasts Record US Crude Production in 2018

US crude oil production will average 9.3 million barrels per day in 2017 before reaching an all-time high of 9.9 million bpd in 2018, the US Energy Information Administration forecast.

The new output level would surpass the previous record of 9.6 million bpd set in 1970. EIA forecasts that most of the growth in US crude production through the end of next year will come from tight rock formations within the Permian region in Texas and from the Federal Gulf of Mexico, EIA said in a statement on its website.

EIA forecasts that the Permian’s rig count will fall slightly to 345 at the end of 2017 and then grow to 370 by the end of 2018, Reuters reported.

US crude imports fell last week by 254,000 barrels per day. Exports, meanwhile, surged to more than 1 million bpd.

The agency also said on Wednesday that US crude stocks fell sharply last week due to strong refining activity and an increase in exports, while gasoline and distillate inventories also dropped more than expected.

Crude inventories fell by 7.2 million barrels in the week to July 21, a far deeper draw than the decrease of 2.6 million barrels analysts had forecast.

That brought US inventories down to 483.4 million barrels, still well above the five-year average but down nearly 10% from their peak in late March. Oil futures rallied on the EIA report and then retraced some gains.

Gasoline stocks fell by 1 million barrels, compared with analyst expectations for a 614,000-barrel drop. Gasoline demand is still down 0.3% for the past four weeks from the year-ago period.

"Overall, this report gives the bulls some solid fundamentals to build on," said David Thompson, executive vice president at Powerhouse, an energy-specialized commodities broker in Washington, D.C. Falling US inventories in recent weeks have helped alleviate some concerns about the global crude glut as Saudi Arabia and Russia, the world's largest producers of crude, underscored their commitment to reducing crude supply and demanded the same of other producing nations.

Analysts have wondered whether the tightening of supplies can be chalked up to seasonal factors or whether prices will continue to rise as the Organization of Petroleum Exporting Countries continues to limit production.

"The report has strengthened the bullish sentiment already prevailing in the market, although the longevity of the move remains in doubt," said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London.


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