At 425.9 million barrels, US crude oil inventories are in the lower half of the average range for this time of year, which should stimulate optimism despite a consistent growth in production in the shale patch and upcoming refinery maintenance season that will certainly affect inventories.
In its annual five-year oil forecast published Monday, the IEA warned that Canadian oil pipeline constraints are part of a wider capacity crisis brewing across North America.
Last year, the IEA forecast United States shale production to grow by 1.4 million bpd by 2022 with oil prices of up to $60 a barrel and by up to 3 million barrels with oil at $80 a barrel. "It was Opec", he said at a recent industry conference in London. If too many Venezuelan oil workers abandon their posts at once out of desperation, the country's fate could more closely mirror Iran in 1979 when a crippling oil worker's strike brought Iranian oil exports to zero and rendered the Shah's rule untenable. Meanwhile, nationwide US inventories are forecast to have risen by 2.5 MMbbl last week.
Crude oil prices tested higher levels on Tuesday but settled almost unchanged after prices were unable to pierce through a downward sloping trend line. It'll probably consume most of the incremental demand.
OPEC hasn't discussed "at this stage" prolonging the cuts beyond this year, Suhail Mohamed Al Mazrouei, the United Arab Emirates oil minister and OPEC's president, told Reuters on Sunday, saying lowering oil inventories is still the group's focus. This has been an effective strategy to boost oil prices because of the widespread participation.
Conflict between the USA and Iran is potentially one of the top geopolitical risks to the oil mar-ket this year. (The report also noted that while the U.S. imports $2.2 billion of steel products related to line pipe from 29 countries, it exports steel and steel products worth five times as much to those same 29 nations).
All this leaves OPEC (and its partnership with Russia) in a quandary.
Russian oil expert Ivan Priobrazhenskiy has commented on the negative outcome of curbing oil production (the OPEC+ deal).
At the same time, America becoming the world's leading oil producer is not something unreal anymore. All comments are subject to editorial review. And a lot more shale oil is coming, both in 2018 and beyond, executives and traders said. Shale firms often use hedges, or financial contracts that lock in a price for future production, to guarantee profits. The observations he makes are his own and are not intended as investment advice.
It's now clear that shale barons are fine with remaining free riders as Opec seeks to instil market discipline. Citi projects that even with expected declines in production in certain non-OPEC producing countries, continued increases from Brazil, Canada, Africa, and global natural gas liquids will overwhelm losses elsewhere, even without a higher than expected contribution from US shale, assuming geopolitical events don't create an unexpected cutoff of a major producer.
In 1983, Cambridge Energy Research Associates (CERA) was founded in Cambridge, Massachusetts, the United States. In other words, the SPR is not superfluous.
"The U.S. will overtake Russian Federation to become the world's largest oil producer by 2023, accounting for most of the global growth in petroleum supplies, a top industry monitor said Monday", writes WSJ. Natural gas for April delivery traded at around $2.75 in the noon hour Tuesday. The January 2019 futures contract traded at $58.49, reflecting traders' concerns that rising USA production will keep downward pressure on prices well into the future.