US Crude Oil Production: Highest Level since February 2016

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U.S. West Texas Intermediate and worldwide Brent crude are lower and in an extremely tight range early Friday.

As of 9:07AM (ET) on Friday, WTI Crude traded up 0.59 percent at $49.04, while the price of Brent was up 0.50 percent at $52. That reassurance may stem a further slide in crude for now, but may not be enough to put the more the $4/barrel knocked out of Brent and WTI in a rout that began on March 7. For the eleven non-Opec countries that are pledged to cut 558 kb/d of production, there is, as yet, far less data visibility.

You see, OPEC and key non-OPEC oil-producing states agreed to slash output by 1.8 million barrels daily in an effort to boost prices because of growing fiscal pressures which, in many cases, were responsible for fomenting economic and social unrest. The US Energy Information Administration said on Wednesday that crude oil stocks fell 237,000 barrels in the week to March 10, defying forecasts of a 10th weekly rise.

Investors are nervous because of a surprisingly big jump in U.S. stockpiles reported last week and increased shale production. Provisionally, we estimate that the non-Opec countries have cut production by 37 per cent of their commitment in the first two months of the year. The aim was to reduce a glut in global oil supply that has depressed prices, which now stand at around $48-$51 per barrel.

Also on Wednesday, the International Energy Agency (IEA) said that it sees an implied deficit of 500,000 bpd for the first half at current production levels and supply and demand fundamentals, despite the fact that OPEC's relentless output increase before their November deal led last month to the first global stocks increase in six months.

"Despite the broad-based headlines of a holistic global oil surplus, we contend that certain markets such as Asia remain in a deficit, while regions like the Atlantic Basin and the USA remain in surplus". Also, sharp crude oil price movements in a short period of time determine inventory gains and losses for these companies.

I've said in my previous articles that the price could come back to test and retest the 53.03 former major support and the 61.8% retracement level before will drop again.

Richard Mallinson, of the consultancy Energy Aspects, said there... The EIA estimates that USA crude oil production will rise to a 48-year high in 2018. EIA forecasts show that United States shale oil production is expected to rise again in April by 109,000 bpd to 4.96 million bpd suggesting that shale is surely making a comeback at this level of oil prices. Combine this with any rumblings that OPEC may not extend cuts past May 25, and market sentiment remains extremely volatile despite a record number of long positions in the crude market.

Prior to the removal of crude oil export restrictions at the end of 2015, almost all US crude exports went to Canada, which was not subject to those restrictions.

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