U.S. oil production nears 47-year record

U.S. oil production nears 47-year record

The implications of this transformation go far beyond global oil markets and are reshaping the global economic order. USA oil prices are hovering near $66 a barrel, well below the 2014 peak of $107 a barrel, but more than $20 a barrel above the $42 in mid-2017. At the same time, USA shale drillers won't be able to meet all the growing demand, the bank says. Production has beaten its previous peak even though there are fewer than half the number of rigs drilling for oil compared with before the slump. But rising yields in the United States may be a threat to rising price of the raw materials. Overall market conditions remained strong due to the production cuts and healthy demand-growth. A decade ago, in November 2008, production from tight formations accounted for only 7% of total USA production.

BBL Commodities, one of the world's largest oil-focused hedge funds, expects Brent crude to reach $80 this year, up from around $70 in January.

"I think the question, a little bit in the longer term is-is this the last big rise in USA production?" he questioned in an interview with Reuters. Don't blame bubbles or speculators or even oil companies. However, this agreement is supporting the oil price and stimulated shale oil production.

The aggressive bullish run that's been seen in Oil prices over the past seven months softened this week in both WTI and Brent.

OPEC has pegged OECD oil inventories at 133 million barrels above the five-year average as of November. The country restored some production that had been shut in by a blockade since November.

This compliance shows great restraint by producers that in other times may have been tempted to cheat or at least look to pick up for plunging production in the collapsing socialist state Venezuela.

Trump's Environmental Protection Agency (EPA), Interior Department and other agencies have aggressively worked to roll back or change Obama-era rules, in the name of increasing use and production of domestic energy. Just over half of US crude comes from shale fields that include the Permian Basin in West Texas and he Eagle Ford shale in the South Texas.

Rising American production has, luckily, not displaced Canadian oil exports to USA - for now.

USA crude, meanwhile, is flowing into global markets. But it's no a longer a one-way street: American oil exports to Eastern Canada have galloped ahead in recent years, mostly at the expense of oil from OPEC countries.

In a separate report, non-farm labor productivity slipped 0.1 percent in the fourth quarter, its lowest since first quarter 2016. Previously, U.S. could only import to Canada. Last April, China bought more than Canada did for the first time, according to Bloomberg. The country exported nearly 3.5 million bpd from the south, the outlet for most of its crude, in a slight decline from December's record high. Canada, which is already losing investment dollars to the US, would also see its ambition to build West Coast export pipelines falter if USA shale starts meeting Asian demand.

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