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Texas Flood: US Oil Pour into Global Markets

Texas Flood: US Oil Pour into Global Markets

"The economic and political impacts of soaring USA output are breathtaking, cutting the nation's oil imports by a fifth over a decade - providing high-paying jobs in rural communities and lowering consumer prices for domestic gasoline by 37 percent from a 2008 peak", Zilber impressed. The EIA said last month, however, that overall November production climbed to 10.038 million barrels a day, the highest since November 1970.

He said that "It is possible that the price of oil could go up to $80 per barrel in the next few months, but I am sceptical whether it can be sustained at those levels".

The fall is associated with the continued growth of crude mining in the United States. Last week, the US Energy Information Administration (EIA) reported the tenth straight weekly drop in USA stockpiles of crude oil.

OPEC's effort helped pull crude oil prices above $50 per barrel, but that price point has incentivized shale oil producers and dampened the impact.

Total U.S. liquids production, which includes natural gas liquids, is predicted to rise by 1.7 million bpd in 2018, which is exactly the same as the forecast increase in global liquids consumption. That was lower than what analysts were expecting.

Distillate stockpiles, which include diesel and heating oil, rose by 3.9 million barrels, versus expectations for a 1.4 million-barrel drop, the EIA data showed.

At 10.25 million bpd, USA output exceeds the previous record of 10.044 million bpd in 1970 and overtakes Saudi Arabia, the biggest producer in the Organization of the Petroleum Exporting Countries.

The FPS is a key infrastructure link for North Sea, with Forties crude being one of the grades that derive the global oil benchmark Dated Brent.

USA crude oil production exploded to 10.25 million barrels a day last week, and virtually every forecast is for that number to remain at or above 10 million for most of the year.

"It's the fourth-largest OPEC producer's first cargo of USA oil, according to Energy Information Administration data", Bloomberg informed.

Oil traded near the lowest closing price in two weeks as concerns about volatility in global markets offset an unexpected drop in USA inventories.

OPEC and its allies need to start planning an exit from their production agreement with the goal of capturing at least some incremental market demand in 2018 and 2019 while preventing another slump in prices. Should this happen, oil could come under even greater pressure with more important milestones reached along the way in the regions of $62.9 (100-day Moving Average) and $60.80 (Fibonacci correction level from the June-January rally) for Brent.

It is worth noting that preliminary figures from the US Energy Information Administration show that US production hit 10.25 million barrels a day last week.

United States oil output increased for a fourth week, the Energy Information Administration data showed yesterday. However, forecasted increase in US crude inventories over the next few weeks and months may change sentiments drastically.

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