Record US Crude Oil Production Coming in 2019, 2020

Record US Crude Oil Production Coming in 2019, 2020

$USO, $OIL, $UNG

US expects domestic Crude Oil production to reach new heights this year and next, and that prices.

And both crude and gasoline will be lower than in Y 2018.

Government forecasters are sticking to their forecast that the United States, already the world’s biggest Crude Oil producer will become a net exporter of crude and petroleum products in Y 2020.

The US Energy Information Administration said (EIA) Tuesday that it expects the United States to pump 12.4 BPD in Y 2019 and 13.2-M BPD in Y 2020. The January average was 12-M BPD, up 90,000 from December.

Most of the increase is expected to come from the Permian Basin in Texas and New Mexico, where production has been booming for several years as operators use hydraulic fracturing and other techniques to squeeze more Oil & Gas from shale formations.

The agency expects NYMEX WTI Crude Oil to average $54.79 bbl this year and $58 next year, down from $65 in Y 2018. It expects ICE Brent Crude Oil to average $61 a barrel this year and $62 next year, down from $71 in Y 2018.

The Y 2020 price forecast is $3 bbl lower than the agency had previously predicted. Strong growth in production worldwide would push prices lower.

That should produce nationwide average gasoline prices of $2.47 gal this year and $2.56 next year, down from $2.73 in Y 2018, according to the agency’s short-term energy outlook.

Concern about oversupply led OPEC and allies including Russia to agree in December to limit output during !-H of Y 2019. On Tuesday, OPEC reported that its member nations sharply reduced production in January.

The Organization of the Petroleum Exporting Countries accounts for about 33% of global supply, producing 30.8-M BPD in December, and now down 800,000 BPD in January.

About 50% the OPEC cuts were taken by Saudi Arabia, followed by the United Arab Emirates and Kuwait. Production in Iran, which The Trump Administration targeted for renewed sanctions on exports, was little changed from December.

Russia’s supply edged lower by 90,000 BPD in January, to less than 11.6-M BPD, according to the OPEC report. Russia’s production has been running at post-Soviet records.

With rising production in the Permian Basin, the Energy Information Administration estimates that US net imports of petroleum products fell from 3.8-M BPD in Y 2017 to 2.4-M BPD in Y 2018.

The price of Nat Gas, an important fuel in power generation and home heating, is expected to rise 4% through Y 2020.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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