The US could overtake Saudi Arabia and Russia in oil production

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США могут обогнать Саудовскую Аравию и Россию по добыче нефти

Daily oil production in the U.S. next year, according to the us Department of energy forecast to exceed 10 million barrels, which is comparable to the current quota of Saudi Arabia. Experts do not exclude that growth can be even more. While maintaining the current level of oil prices and operating restrictions on mining under the deal, OPEC+, the US can push Russia out of first place for the production of black gold.

The United States intends to continue to increase oil production in 2018. According to the forecast of the energy information administration of U.S. Department of energy (EIA), by the middle of 2018, the daily oil production could exceed 10 million barrels.

“Average daily production of crude oil in the United States for 2017 will amount to 9.2 million barrels in 2018 — 10 million barrels per day, which will be the highest figure since 1970, when average annual production was recorded at 9.6 million barrels per day”, — stated in the latest EIA forecast.

In 2017, the United States produces in a day to 9.2 million b/d, Saudi Arabia produces slightly over 10 million b/d, Russia — 10.5 million b/d. production Growth in the U.S. over the next year is 8.7% and these indicators American companies reach to the end of 2018, draws the attention of the senior analyst, “freedom Finance” Vadim Merkulov. While Saudi Arabia and Russia will not increase oil production because they agreed to the extension of the agreement on production cuts, he adds.

In November, daily production in the U.S. increased by 360 thousand barrels per day compared to the October figures. In EIA it is associated, primarily, with the growth of production in the Gulf of Mexico by 290 thousand b/d, where drilling platforms are forced to act out the decline of production associated with the hurricane.

Experts believe that the growth of oil production in the United States while maintaining high oil prices may be even greater.

“In 2018, with the growth of shale production in the US by 0.7-1 million barrels per day and restrictions in the transaction of OPEC, we expect the United States will surpass the production levels of Saudi Arabia,” — said the head of analytical Department UK “BK Savings” Sergey Suverov.

According to analysts, by the end of 2018, production in the US could reach a 10.4-10.7 million barrels per day.

He does not exclude that the US may overtake the level of production and Russia in 2019, subject to the renewal of the deal, OPEC+ for 2019 or when a new technological leap in shale production, which may reduce the cost of production of North American oil.

The analyst of “ALOR Broker” Eugene Kiryukhin believes that at the current rate the US can approach the level of production of Russia no earlier than 2019, and that’s assuming that oil prices will not fall.

For the United States will be risky to increase the volume of production faster than 8% as this can have a negative impact on the price of Brent and WTI, says Vadim Merkulov.

The growth of oil production in the United States predict and international organizations. So, according to the December OPEC forecasts, oil production by countries outside the cartel, in the following year will amount to 990 thousand barrels per day, which is 120 thousand b/d above the previous forecast.

According to the forecast of the cartel, oil production in the United States next year could grow by 1.05 million b/d. “it is Expected that the momentum continues into this year, will remain in 2018, with increased investment in the production of shale oil in the United States and increase the efficiency of wells,” the document says.

OPEC calls oil shale production of the United States “one of the main factors of uncertainty on the world oil market to 2018”.

In September, OPEC Secretary General Mohammed Barkindo noted that the growth of shale oil production is weakening, and the productivity of oil wells decreases. And the oil Minister of Saudi Arabia Khalid al-falih, speaking at the Russian energy week in October, said that he “did not care about the shale Renaissance.”

“The reality has shown: unreasonable expectations of some analysts that shale production will be revived at a certain price level, are unrealistic,” he said.

Against the background of falling oil prices in past years to $40-46 per barrel interest in the development of shale began to subside. Many analysts talked about the high costs and the depletion of these resources.

But now, after the extension of the transaction for the reduction of OPEC oil production prior to the end of 2018, oil prices steadily went above $60 per barrel, and experts are increasingly called shale production one of the major risk factors in the market.

Cash operating costs of oil shale production is $25-35 per barrel for the full operating costs of $30-45 a barrel, says Suverov.

At the same time, high demand for oil in the United States and other countries will mitigate the effects of production growth.

Increasing consumption of black gold is about 2.5% per year, but the amount of consumption in the world exceeds 96 million barrels per day that will alleviate the growth in the US, says Vadim Merkulov.

Eugene Kiryukhin draws attention to the fact that the needs of the U.S. oil constitute 19.2 million b/d, i.e., a deficit of 10 million barrels per day to the face, and it’s more than in 2003, when States imported up to 8 million b/d with the price of oil $33 per barrel, the expert emphasizes.

Almost all international organizations and financial institutions forecast oil prices next year below $55 per barrel.

The international rating Agency S&P Global Ratings in November raised the forecast average price of Brent crude oil in 2018 to $55 per barrel from the previously expected $50. The UN on Tuesday gave a forecast of gradual growth Brent “from an average of $52.5 per barrel in 2017 to $55.4 in 2018”.

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