Oil up for week on Libya woes, falling United States supply

Fredrick Soto
March 2, 2018

Finally, the recent startup of the Louisiana Offshore Oil Port (LOOP), which is the only port capable of handling the oil industry's largest oil tankers, has raised expectations of a flood of US oil reaching the global market. It will cut off the global shipments along with OPEC-led oil cuts.

Oil fell more than 1 percent on Thursday, hitting two-week lows on pressure from a strong dollar and worries that surging US crude output might thwart OPEC's efforts to drain global supply. "$60 to 70 is the range we're seeing for this year".

There is a significant geopolitical implication for OPEC and the oil producers in the Middle East from the test loading of a VLCC at LOOP.

U.S. crude inventories are forecast to have risen by 2.7 million barrels last week, a preliminary Reuters poll showed on Monday.

The United States will overtake Russian Federation as the world's largest oil producer by 2019 at the latest, according to the estimates of the International Energy Agency.

"The United States will become the No.1 oil producer sometime very soon", Birol told Reuters, reiterating the IEA's estimate from its latest monthly Oil Market Report published earlier in February. "The prices will lower down and remain steady most probably by the end of 2019".

While the group has agreed to prolong the cuts until the end of this year, "the framework beyond 2018 is yet to be determined, but for sure from the Saudi and from the OPEC standpoint, there is a determination to translate the success of 2017 and 2018", he said in New Delhi on Saturday.

United States crude oil output rose above 10 million barrels per day (bpd) late past year for the first time since the 1970s, overtaking top oil exporter Saudi Arabia. "They (Saudi Arabia) was in agreement on the issue".

"Production, while still up, has tailed off", he said. Production in OPEC member Libya has been running at about 1 million bpd, although it remains volatile due to unrest.

The American Petroleum Institute (API) reported Tuesday an increase in US oil inventories by around 933,000 barrels for the week ending February 23.

"Yesterday's inventory report was very bullish for crude oil", John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by telephone.

PTI reported that India asked the world's largest oil producer Saudi Arabia for a "reasonable" oil pricing that balances the interest of producer and consuming nations. The oil minister of Saudi Arabia, Khalid al-Falih did not participate in reducing the prices.

Falih stated, "a$3 study is taking place and once we know exactly what balancing the market will entail, we will announce what is the next step".

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