US Oil Expected To Meet Most Of World's Growth In Demand

by Susie Olson March 9, 2018, 3:29
US Oil Expected To Meet Most Of World's Growth In Demand

Adding to stockpiles, U.S. crude production has risen to more than 10 million barrels per day (bpd), overtaking top exporter Saudi Arabia.

The EIA expects next year's U.S. production to average 11.3 million bpd, the report said.

Prices briefly pared losses after data from the Energy Information Administration said United States crude inventories rose by 2.4 million barrels in the last week, compared with analysts' expectations for an increase of 2.7 million barrels.

"Crude is. under pressure from rising USA production, which hit a new high last week, now firmly above Saudi Arabia's production level", said William O'Loughlin, investment analyst at Australia's Rivkin Securities.

Brent futures slipped 32 cents to $64.47 a barrel by 1232 GMT, while USA crude futures fell 33 cents to $62.27, although both contracts had eased off their lows in line with a recovery in S&P futures. The report's out a day after the S&P 500 futures dropped 1 percent on the news that President Trump's advisor Gary Cohn had handed in his resignation - a move seen widely as fueling further worry about a possible global trade war if the United States approves Trump's proposal for a 25-percent import tariff on steel and a 10-percent levy on aluminum.

Crude oil followed suit, with Brent futures LCOc1 down 51 cents, or 0.8 percent, from their previous close at $65.28 per barrel at 0414 GMT.

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The April crude oil futures started the session at 62.30, and was down 22 cents.

Crude oil prices fell more than 2% amid mounting concerns of a potential trade war and after us government data showed a second straight weekly increase in crude inventories and production. Declines in the equity market, a rising dollar and concern that Trump's tariff threats will spark a trade war acted as a downward force on crude oil.

"The build was much less than the 5.66 million barrel build that the API had reported last night, which may have spooked the market a bit", said Nick Holmes, an analyst at Tortoise in Leawood, Kansas, which manages $16 billion in energy-related assets.

"The rising oil-production profile in the USA remains the predominant bearish factor affecting prices", said Abhishek Kumar, senior energy analyst at Interfax Energy's Global Gas Analytics in London. The resurgence in USA production is the most prominent change since the group's last forecast.

WTI traders should watch the price action at $61.20. USA output is expected to surpass that of Russian Federation, now the world's top producer at about 11 million barrels a day.

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