Last week crude oil production was top of mind in the media cycle. Dynamics between the US and OPEC outputs continue to fluctuate as US pushes ever higher in production and OPEC clings to its mission to reduce. The Trump administration also plans to undo the Methane-Emission Rule related to drilling operations.
U.S. Increased Oil Output vs. OPEC Production Cuts
Several stories broke regarding the fight between U.S. increased oil output and OPEC’s production cuts as oil and diesel prices continued to drop last week. OPEC increased their oil supply forecast from producers outside the cartel by 1.4mmbd, most of which comes from the U.S. Similarly, WSJ reported U.S. production is ramping up faster than it did between 2011 and 2014, but with oil prices 40% lower this time. The U.S. oil production surpassed 10 mmbd in November pushing the U.S. into second place above Saudi Arabia in crude oil production. All of these headlines have weighed on prices of crude oil and diesel, as the national market diesel and WTI crude oil price dropped by $0.24/gallon and $6.61/barrel, respectively, in the first twelve days of February. Looking to the future, U.S. production is projected to surpass 11 mmbd by 2019.
In response to increased oil supply news, Saudi Arabia announced they will cut an additional 0.1 mmbd in March and keep exports below 7 mmbd to stabilize the oil market. After the announcement, crude prices rose in the following days. After a year of strong oil demand growth in 2017, 2018 is predicted to be much closer to supply-demand balance. Therefore, headlines of US production vs. OPEC production cuts could continue to have noticeable impacts to crude oil prices and to prices at the pump.
In Other News
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