Despite the rising production, oil prices traded higher on Tuesday, with USA crude touching its highest since December 2014.
In addition to the OPEC and non-OPEC production cuts of 1.8 million barrels per day (bpd) that are due to last until the end of 2018, oil prices have found support from eight consecutive weeks of USA crude inventory drops.
"In both 2018 and 2019, EIA expects total global crude oil production to be slightly greater than global consumption, with US crude oil production increasing more than any other country", its latest report read.
Near-term outlook for USOIL remains constructive as crude prices clear the May 2015-high ($62.56), while the Relative Strength Index (RSI) extends the bullish formation from the previous month and pushes deeper into overbought territory. That level would be the highest annual average on record, surpassing the previous record of 9.6 million b/d set in 1970.
Only Russia and Saudi Arabia have produced more crude, hitting peak output of over 11 million bpd and about 10.7 million bpd respectively in recent years. EIA forecasts the US average regular retail gasoline price will average $2.57/gallon (gal) in 2018 and $2.58/gal in 2019, slightly higher than the $2.42/gal average in 2017.
USA output will be at an all-time high in 2019, surpassing 11 million bpd by the end of that year, a new high for national output, the EIA said in the report.
EIA expects OPEC crude oil output will rise by an additional 0.3 MMBPD in 2019 as crude oil production slowly returns to pre-agreement levels.
"The major risk factors would be more global in nature, rather than anything specific domestically", EIA acting administrator John Conti said on a conference call.
Iranian Oil Minister Bijan Zangeneh said Tuesday that prices this year were supported in part by OPEC commitments, but also by demand strains from severe winter weather. EIA estimates that, without pipeline constraints, moving crude oil from Cushing to the US Gulf Coast typically costs $3.50/b and that it costs approximately $0.50/b more to transport WTI from the United States to Asia than to ship Brent from the North Sea to Asia.
On Dec. 9, the EIA estimated that US crude oil production could average 10.3 million barrels per day in 2018 - record levels for the United States and roughly 1 million barrels per day higher than estimated 2017 figures.
The agency said its forecast of $60 Brent this year and $61 in 2019 is based on an expectation that global oil inventories will rise this year and next, contributing to a decline in Brent prices in the first quarter of the year, with prices expected to remain relatively flat thereafter through 2019.
US production for 2017 averaged an estimated 9.3 million bpd, and is estimated to have averaged 9.9 million bpd in December, EIA said. Regional summer price spikes can not be precisely predicted.The agency expects gasoline demand in 2018 to total about 9.3 million barrels a day this year, a level that would surpass all-time records set last year.
Eagle Ford production is expected to be from 1.2 million bpd to 1.3 million bpd this year and next, which EIA said is slightly above the 2017 level.
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