Oil Prices Increase as US Lowers Crude Production Estimates

EIA: The US imports and exports substantial volumes of petroleum

Oil Rises Strongly Supported by Cuts, Sanctions

The price of oil has been steadily increasing over the past couple of months.

Oil exports at 3.5m b/d, production 4.5m b/d.

The National Bank of Australia said the outlook for the oil market was mixed because there were downside risks to prices due to concerns about economic growth and strong growth in United States supply, while the cutbacks in OPEC declined and the U.S. imposed sanctions on Iran and Venezuela.

Worldwide benchmark Brent crude was trading at $66.94 per barrel at 0708 GMT with a 0.2 percent gain, after it closed Tuesday at $66.81 a barrel. For both benchmarks, these are prices that haven't been seen since mid-November.

The report said US crude oil production averaged 11.9 million barrels per day in February, lower than the January average. This was a good deal higher than what the 3.3 million barrels expected by analysts that were polled recently.

Meanwhile, U.S. gross petroleum trade, which stands for imports plus exports, reached an all-time high of 17.5 million barrels per day.

EIA: The US imports and exports substantial volumes of petroleum

In the US, a Commerce Department report showed sales of new USA single-family homes fell more than expected in January, suggesting housing market weakness early in the first quarter.

Traders have been weighed by the prospect of record US shale production, with markets reacting often in direct correlation to any new news on the nation's output and expectations.

In parallel, domestic oil output dipped by 100,000 barrels a day to reach 12.0m b/d with refineries operating at 87.6% of capacity. The agency also slightly reduced it's 2020 predictions, bringing it's forecast down from 13.2 million barrels a day down to 13 million. "The second wave of the US shale revolution is coming", added Fatih Birol, the IEA's executive director in a press release recently. The EIA now expects USA oil production to average 12.3 million barrels per day this year and 13.0 million barrels per day next year. "This will shake up worldwide oil and gas trade flows, with profound implications for the geopolitics of energy".

Brian Stutland, chief investment officer at Equity Armor Investments, said, "We're seeing some supplies tighten a little bit.and also the correlation between oil and the stock market and demand coming back into the picture has sort of driven it: oil lagged a little bit as the dollar strengthened, and I think it's trying to play catch-up".

Continued supply reductions would further support oil prices, which are up about 25 per cent this year at $68 a barrel.

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