Oil gains after Goldman Sachs predicts rise above $80

U.S. oil production, driven by shale extraction, surpassed 10 million barrels a day in November for the first time in almost 50 years, according to data released this week by the U.S. Energy Information Administration, reigniting concern the market is oversaturated with crude. From 2000 through 2010, American production fluctuated between 4 and 6 million barrels per day, federal data show, before beginning a steady uptick at the beginning of this decade.

It's been nearly 50 years since the market has seen such an oil boom in the US. November's production is the first time since 1970 that monthly USA production levels surpassed 10 million b/d and the second-highest US monthly oil production value ever, just below the November 1970 production value of 10.044 million b/d.

Shale and other tight oil production reached 5.09 million barrels per day in November, just more than half the country's total output.

In November, the U.S. Producers have pulled back from marginal areas to the most productive "core" parts of shale plays such as the Permian in western Texas and eastern New Mexico.

Crude has remained above $60 a barrel since late December, boosted by shrinking USA stockpiles and a weaker dollar, extending an advance from June amid OPEC-led output cuts to clear a glut.

Domestic production grew by 41,000 barrels per day to 9.919 million barrels per day. There was higher consumption from the United States and China and Europe and we feel that we will add another two million barrels of oil consumption in 2018.

In world markets, oil prices were up in trading yesterday along with OPEC continued commitment to reduce supplies.

Meanwhile, West Texas Intermediate crude prices rose 25 cents to $66.04, while Brent, used to price worldwide oils, was up 25 cents, at $69.90 a barrel at the New York Mercantile Exchange.

The cartel's efforts have helped boost crude prices by more than 50% since mid-2017.

Brent futures, the global benchmark, were up 24 cents, or 0.3 percent, at $69.89 a barrel by 0635 GMT. Yet, the bank said its view was cyclical and sees Brent dropping down to US$60 a barrel by 2020. Russian Federation isn't the only country caught supporting North Korea's fuel needs this month: at least six Chinese ves-sels were delivering oil to North Korean ports as well. Overall market conditions remained strong due to the production cuts and healthy demand-growth.

Other analysts are not convinced that the markets justify such a high price. Front-month prices are down 1.9 percent this week, the first loss in about a month.

Okay so our big concern with the oil market right now is that these higher prices are not sustainable. Previously, many investors had punched holes on the accuracy and the methodology used by the EIA to collect the data.

  • Anthony Vega