U.S. crude oil production is expected to surpass 10 million barrels per day (bpd) next month, en route to an all-time record months ahead of previous forecasts, the U.S. Energy Information Administration said Tuesday.
The increased crude prices are already having an impact at gas stations across the U.S. According to travel analyst group AAA, the $2.49 per gallon average U.S. gas price on New Year's Day of 2018 was the most expensive price for that date since 2014. WTI the day before rose to its strongest since late 2014 at $64.77.
USA commercial crude stocks fell by nearly 5 million barrels in the week to January 5, to 419.5 million barrels.
Prices for Brent crude oil futures, the worldwide benchmark for oil prices, have risen by more than 50 percent since mid-2017 and hit $70 per barrel this week for the first since December 2014.
Taking advantage of their competitive prices, USA crude oil exports are rising, including to faraway Asia.
Craig at Platts, meanwhile, said gasoline demand could inch lower and it may be a matter of time before oil prices reverse course. With crude trading near a three-year high, here's a look at how investors have increased their thirst for oil. In particular, US crude oil production is expected to increase more quickly than any other country. With the typical inverse link between crude prices and the dollar taking hold once again in the second half of the year, oil got another shove.
U.S. West Texas Intermediate (WTI) crude futures were at $63.34 a barrel at 0755 GMT, down 46 cents, or 0.7 percent, from their last settlement.
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Analysts and traders have warned about the risk of a price correction since the start of 2018, but they say overall market conditions remain strong, mainly due to output cuts led by Organization of the Petroleum Exporting Countries and Russian Federation. The ongoing push to cut production should keep oil prices afloat over the near-term especially as US output falls back from fresh record-highs.
Homes that use heating oil will spend an average of $215 or 17 percent more this year than last, and that's assuming a "normal" winter.
"Oil prices have been undeniably bullish this week despite the lingering concerns over the current bull rally running out of steam".
The EIA said it expects the share of United States total utility-scale electricity generation from natural gas to rise from 32% in 2017 to 33% in 2018 and to 34% in 2019, as a result of low natural gas prices.
USA crude oil production is being forecast to average 10.3 million b/d in 2018, marking the highest annual average production in US history.
That would match the all-time monthly record of 10.04 million bpd set in November 1970; oil production declined after that as the United States increasingly relied on imported crude.