OPEC says U.S. oil production to rise again in 2018

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"Supply is swiftly catching up to strong demand growth", said Norbert Ruecker, head of commodity research at Julius Baer. Reuters reports in its article Oil prices stable on healthy demand, but oversupply looms later in 2018 that U.S. West Texas Intermediate (WTI) crude futures were at $61.05 a barrel at 0129 GMT, up 9 cents, or 0.15 percent, from their previous close. Year-to-date, the ORB was 23.4%, or $12.37, higher than seen in the same period a year earlier, at $65.25/b. Brent crude futures were at $64.95 per barrel, up 8 cents, or 0.1 percent.

Despite Venezuela's failing regime, the South American country boasts the world's largest proven oil reserves but for years it has been considered a rogue member of the OPEC (Organisation of the Petroleum Exporting Countries) family.

Opec and other producers led by Russian Federation began cutting supply in January 2017 to erase a global crude glut that had built up since 2014.

Brent Crude
Daily June Brent Crude

With crude oil production steadily declining in recent years, the country is grinding to a halt as the lingering effects of an economic crisis caused by years of government mismanagement have been further compounded by a recent slump in the price of oil. This is marginally higher than last month's assessment.

Following years of sharp output losses, Venezuela's crude output is projected to tumble to 1.38 million barrels per day (mb/d) by the end of 2018, according to the IEA. The discount of April contracts to May widened to 6 cents as growing supply weighed on the value of oil for prompt delivery.

United States production growth is still expected at 2.7% in 2018, up from 2.3% in 2017. The U.S. Energy Information Administration said U.S. crude oil stocks rose by 5 million barrels last week, about twice as high as expected.

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Prices also received some support from Rex Tillerson's ouster as U.S. secretary of state. Despite a big move up in the USA dollar yesterday, crude oil managed to eke out small gains.

"According to secondary sources, OPEC crude production decreased by 77,000 b/d in February 2018, averaging 32.19 mb/d". This means that if the cartel decides to extend its production cuts beyond 2018, there will be a further increase in United States shale oil production.

A report Thursday from the International Energy Agency found the market surplus that dragged on oil prices two years ago has "all but disappeared".

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Oil may also soon get some support from seasonal demand.

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