05 February, 2018
The American oil industry is literally swimming in crude, and there is little sign of it ending anytime soon.
Global oil demand rose by 1.6-million barrels per day (bpd), or about 1.5%, last year and UBS said it should grow by another 1.3-million this year or even more after the International Monetary Fund (IMF) raised its global economic growth forecast. According to the EIA, global oil demand increased to 98.38 million barrels a day in 2017 up from around 92 million barrels of oil a day in 2015.
US oil production, led by record output in Texas, averaged more than 10 million barrels a day for the first time since 1970 as oil prices rose, drillers became more efficient, and export markets grew.
Industry experts believe the US may be the world's top crude oil producer this year, a possible boon for Oklahoma's energy-reliant economy. Non-tight oil production has been mostly constant over the previous decade.
Production continued to increase through these price fluctuations in three formations in the Permian Basin-the Spraberry, Bone Spring, and Wolfcamp plays that span parts of western Texas and eastern New Mexico-and in the Bakken formation in the Williston Basin in North Dakota and Montana.
Oil prices rose yesterday after a survey showed OPEC's commitment to its supply cuts remains in place. The global benchmark crude traded at a premium of US$4.37 to April WTI.
Goldman Sachs on Thursday raised its 2018 oil price forecasts, projecting that Brent crude will soon top $80, fueled by blockbuster oil demand, a deal among big producers to limit output and US drillers' inability to meet the world's growing energy appetite. The only thing holding up prices is the fact that OPEC members, for the moment, are happy to let the USA benefit disproportionately from their output cuts.
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"One important role in this rapid price recovery is played by the weak USA dollar, which is again nearing the three-year low it hit last week, " analysts at Commerzbank wrote in a note Friday. Other analysts see WTI crude trading at between $60 and $75 a barrel in 2018.
Many of these drivers will continue into 2018, and the world's growing appetite for oil now looks even more ravenous than anticipated, Goldman says.
Still, prices have been relatively steady in recent weeks, helped by a weakening US dollar and production outages in OPEC-member Venezuela.
In November, the U.S.
Net imports to the U.S. are still now about 2.5 million barrels a day, down from a record high in 2006 of 13.4 million barrels a day. They could be producing a lot more and cash in as much as they can.
Rivers State Governor, Chief Nyesom Wike (2nd left), acknowledging cheers from traders at the Mile One Market, during the inspection of ongoing projects with traditional rulers in Port Harcourt, last Wednesday. That is pretty much the top of the range for most forecasts out there.
Yet others predict oil's era is far from over, in the United States and globally. The country exported nearly 3.5 million bpd from the south, the outlet for most of its crude, in a slight decline from December's record high.