US Crude Production Continues Climb Toward Record High

Thursday, 24 Aug, 2017

October crude was at $47.63 a barrel in electronic trading, down from the new front-month contract's settlement of $47.83 on the New York Mercantile Exchange.

Gasoline inventories rose significantly, up 1.402 million barrels, while distillates were up 2.048 million barrels. Also, Croft said, the Trump administration could pull out of the Iran nuclear deal and return to sanctions, which could affect Iran's output, again pushing up worldwide prices.

On Friday, crude oil prices had spiked following a report indicating a decline in U.S. E&P activity.

US supply continues to grow, as well, EIA data showed. Progress comes in part from a higher oil price but also an impressive control of costs with capex set to be down another 6% and unit opex down 8%.

"If the downtrend in oil inventories is maintained, then a bullish case can be made for oil, especially given the ongoing supply restrictions from OPEC and Russian Federation", he added.

Oil prices dropped on Wednesday, as investors assessed mixed messages about Libya's oil supply and waited for weekly data on US oil production.

Additionally, industry data released by the American Petroleum Institute showed on August 22 that US gasoline stocks rose by 1.4 million bbl in the week to August 18, compared with analysts' expectations of a 3.5-million-bbl drop.

Refinery runs last week averaged 17.5 million barrels of crude, compared with 17.6 million bpd a week earlier, when gasoline output fell to 10 million bpd.

The latest monthly oil market report by the IEA showed that OPEC compliance slipped to 75 per cent in July, from 77 percent in June. US crude output climbed by 26,000 bpd to 9.53 million last week, the highest since July 2015.

If participants in the oil production cut want to balance the market quicker, the only way is to cut output at a higher and faster pace.

Libya's rising output is a problem for OPEC, which together with non-OPEC producers agreed to cut oil output around 1.8 million bpd of supplies until March 2018. USA exports, which fluctuate on a weekly basis, rose to 936,000 bpd from 877,00 bpd the previous week.

Investors positioned themselves for official gasoline inventory data due later today from the US Energy Information Administration to similarly surprise on the upside.