US Crude Output Rises to 10 Million/BPD

Feb 09, 2018, 00:18
US Crude Output Rises to 10 Million/BPD

Tuesday evening the American Petroleum Institute (API) reported that crude inventories fell by about 1.05 million barrels in the week ending February 2. With their 10.25 million barrels per day, the USA became the third country in the world behind Russian Federation (10.95 million) and Saudi Arabia (10.6 million) with a production that exceeds 10 million barrels per day. At home, the export boom has filled pipelines and sparked a surge of investment in new shipping infrastructure on the Gulf Coast. The more conspicuous one is increasing supply and stockpile, of course.

But this isn't the first time the unlikely scenario of America selling oil to the oil-rich Middle East has happened - it also occurred a few months earlier when the USA sold oil to Abu Dhabi.

And this new record, expected within days, likely won't last long. "The ability of crude oil inventories to rise in the face of a snap back higher in refinery utilization was particularly bearish".

Separately, China's state-owned chemical and oil conglomerate Sinochem Group plans to open a trading office in Houston later this year to source US crude for China's independent refineries, five sources familiar with the plans told Reuters. Brent crude futures edged down 11 cents to $66.75 a barrel by 0951 GMT, while US West Texas Intermediate (WTI) crude futures eased 12 cents to $63.27 a barrel. At the end of the month, the Energy Minister announced the state oil company ADNOC will further reduce production to comply with the deal. High OPEC compliance and falling Venezuelan production more or less offset surging output from US shale and an uptick in inventories in the meantime.

The global oil sector is in a much more optimistic place.

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For the past week, crude imports averaged 7.9 million barrels a day, down by 500,000 compared with the previous week. With the market recovery underway, many in the industry are now wondering when OPEC will end its production cut and what the consequences will be.

OPEC members Saudi Arabia, Nigeria and Angola have been among the hardest hit. Saudi output probably averaged 10 million a day last month and Russian Federation pumped an estimated 10.98 million a day in 2017. Meanwhile, U.S. seemed to offer some measures of support for a military coup in the country.

At the time of writing, Brent crude oil prices were down 1.22 per cent at $64.71 a barrel while West Texas Intermediate, the USA benchmark, was down 1.59 per cent at $60.81 a barrel.

The United Arab Emirates isn't the most obvious customer for Texan oil.

"It has had incredibly positive impacts for the USA economy, for the workforce and even [for] our reduced carbon footprint", England proclaimed.

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Surging U.S. exports are rippling through the rest of the domestic energy economy. These include a crimp on output last May, minor restrictions in October 2016 and a short halt the previous month.

Crude and gasoline stockpiles rose last week, adding to worries about rising US oil production and pressuring crude prices. So the decline in the oil inventory actually comes from higher refinery draw and utilization to make petroleum products that ended up sitting in the gasoline storage.

In 2013, the United States shipped just over 100,000 barrels a day.

Brent crude futures have lost around 4.5% during the week.

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