Published: Fri, February 09, 2018
Global Media | By Garry Long

Oil slides as United States output soars and North Sea crude flows restart

Oil slides as United States output soars and North Sea crude flows restart

Oil prices hit a one-month low during the trading session following reports of a rise in US shale output.

Brent crude, the global oil benchmark, rose 0.1 percent to $66.93 a barrel on London's ICE Futures exchange.

The EIA said November U.S. production rose to 10.038 million bpd, even though less-reliable weekly figures released at the time were far short of that number. WTI (West Texas Intermediate) crude, which until then was trading at about $50 a barrel, surged about 20 percent in one month following the crisis.

Oil prices largely reversed earlier falls on Thursday as a North Sea pipeline outage and record Chinese imports countered USA crude production soaring past 10 million barrels per day.

The EIA raised the US' 2018 average output forecast to 10.59m bpd, up 320,000 bpd from its estimate last week.

US crude inventories rose 1.9 million barrels in the week to February 2, to 420.25 million barrels. This increase was one of the factors that supported oil prices in late 2017 as it led to drawdowns in USA oil inventories - a closely watched gauge of supply and demand.

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USA producers are pumping more oil after cuts by major producers, a weak dollar and geopolitical threats to supply sent crude prices roughly 50% higher in the second half of 2017. "The market is going to try to determine if the crude draw offsets the distillate build heading into tomorrow's EIA report", said Phil Flynn, analyst at Price Futures Group.

The price of USA crude turned negative and was down 1.3% at $62.59 per barrel. However, crude imports in the country have fallen after the recent rise in the production and inventories last week.

Now investors are expecting the publication of data from the U.S. Energy Department. The EIA said this year the US will produce an average of 10.6 million bpd, rising to 11.2 million bpd next year.

"The US dollar index was notably seen shooting up to trade at 90.30 levels", Pan Jingyi, market strategist at IG, said. According to the Energy Information Administration, crude oil product could hit 9.9 million barrels per day in 2018, which surpasses the prior high reached in 1970 of 9.6 million barrels per day.

Global crude oil prices continued to extend last week's losses through Monday and early Tuesday trade, tracking plunging global stock markets.

Crude oil futures plunged Monday along with global stocks as the US dollar rallied on expectations of interest rate hikes.

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