An oversupplied market contributed to a sharp decline in crude oil prices, which dropped below $30 per barrel two years ago.
If achieved, it would break previous records as higher petroleum prices trigger a drilling revival in shale fields, the Energy Information Administration's first short-term forecast for 2019 reveals.
The forecast had no impact on the oil market on Tuesday.
The oil market has been buoyant for weeks, with USA crude futures at highs not seen since late 2014, and Brent crude less than US$1 per barrel away from a similar milestone. Brent in London traded around $US68.55 per barrel, a new 2 ½-year high.More news: Google Duo allows you to call people who don't have the app
The nation's crude oil stockpiles fell for the eighth consecutive week, sliding by nearly 5 million barrels last week, the Energy Department said Wednesday. US crude oil production is expected to continue increasing in 2019 to an average of 10.8 million b/d.
EIA research shows that us gasoline prices tend to follow the price of the best grades of oil in Europe, more than they follow the price of the best USA crude.
On Tuesday, the EIA boosted output expectations, saying it now sees overall production at record highs, surpassing 11 million barrels per day (bpd) by 2019. These levels of USA crude oil output are expected to continue increasing in 2019 to an average of 10.8 million b/d. EIA estimates that, absent significant pipeline constraints, moving crude oil from Cushing, Oklahoma, to the U.S. Gulf Coast typically costs about $3.50/b. On November 31, 2016, the oil cartel Opec and non-Opec countries committed to cut down supplies by 1.8 million barrels a day till the end of 2018.
Most of the growth in United States output will come from the Permian basin, a huge shale region spanning western Texas and New Mexico. EIA expects consumption growth will average 1.7 million b/d in 2018 and 1.6 million b/d in 2019, driven by the countries outside of the Organization for Economic Cooperation and Development (OECD).More news: Thomas Fire, California's Largest On Record, Is Now 100 Percent Contained
Phil Flynn, the senior market analyst for the PRICE Futures Group in Chicago, said in an emailed market report that demand strains were offsetting some of the production trends.
"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. Non-OECD consumption growth is expected to account for 1.2 million b/d and 1.3 million b/d of the growth in 2018 and 2019, respectively.
The national average price this summer should peak in August at $2.63.
That's bad news for the USA coal industry and Donald Trump ambitions to restore coal's fortunes. The head of Russian oil company Lukoil, Vagit Alekperov, meanwhile, said that if oil prices stay this high, the effort led by OPEC, but which includes Russia, will need to gradually come to an end.More news: Stifel Financial Corp Sells 6392 Shares of Conagra Brands Inc (NYSE:CAG)