In addition to the Opec and non-Opec production cuts of 1.8 million barrels per day (bpd) that are due to last until the end of 2018, oil prices have found support from eight consecutive weeks of USA crude inventory drops.
Singapore average refinery profit margins have fallen below $6 per barrel this month, their lowest seasonal level in five years. Analysts said that could have been the result of extreme cold temperatures across the United States.
Yet, another of the bearish signals is rising US oil production, which is threatening to derail OPEC's and Russia's efforts to tighten supplies. 2019 US production is forecast to average 10.8 million bpd, and to top 11 million bpd in November 2019, the agency said.
Non-OPEC production, led by the USA and Canadian oil sands projects, is forecast to continue growing through the end of 2019, Conti said, with growth of 2 million bpd of non-OPEC production in 2018 and 1.3 million bpd in 2019.More news: Fusion GPS Testimony: Michael Cohen Is A 'Very Intimidating Person'
Because US production increases will need to compete for market share in Asia, the difference between Brent and WTI prices is supported by cost differences to get there.
USA crude oil production is being forecast to average 10.3 million b/d in 2018, marking the highest annual average production in US history.
US production growth is estimated at 1.5 million bpd in 2018 and 1 million bpd in 2019, with Canada and Brazil expected to contribute combined growth in both years of some 400,000 bpd. OPEC, along with non-members including Russian Federation, have extended through the end of this year a deal to cut supply by 1.8 million bpd.
"Inventories ended 2017 9.3 percent above the five-year average, a stark contrast to the 35.6 percent surplus seen at the end of 2016", Oil Futures Editor Geoffrey Craig said in a statement emailed to UPI.More news: Vacation of Pre-election Judgement: Obiora Okonkwo Rejects Court Ruling, Proceeds to Appeal
US demand growth of 150,000 bpd was estimated for 2017, slightly lower than previous expectations.
Most of the remaining growth will come from offshore wells in the federal waters of the Gulf of Mexico, with seven new projects expected to come online by the end of 2019, the agency said. The Saudi state oil company is expected to debut this year. Average WTI crude oil prices are forecast to stay between $4/b and $5/b lower than Brent prices in both 2018 and 2019, falling from the $6/b average price difference seen in the fourth quarter of 2017. These liquids are less valuable than gasoline and diesel to refiners and largely are destined to the export market, where they are sold relatively cheaply.
Near-term outlook for USOIL remains constructive as crude prices clear the May 2015-high ($62.56), while the Relative Strength Index (RSI) extends the bullish formation from the previous month and pushes deeper into overbought territory.More news: Investors Buy Shares of Freeport-McMoRan (FCX) on Weakness