Oil price dips before USA crude inventory data

Oil price dips before USA crude inventory data

So far in February 2018, US crude oil production has topped 10 million bpd in each of the three previous weeks, EIA data shows.

Last week, the US Energy Information Administration said there was a surprise drop in oil reserves against a background of lower imports and higher exports.

Reuters is reporting Brent crude futures eased 6 cents to $67.44 a barrel by 1519 GMT, while U.S. West Texas Intermediate crude fell 12 cents to $63.79.

Yet, thanks to the shale resurgence, here we are-over the past few weeks, American crude oil production outstripped that of Saudi Arabia, OPEC's de facto leader and biggest exporter. Brent, the global benchmark, lost 87 cents, or 1.3%, to $66.63 a barrel. While Canadian production has continued to rise, reflecting past investments, pipeline capacity constraints have limited producers' options for moving their products to USA markets.

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Prices were supported after Saudi Arabian oil minister Khalid al-Falih on Saturday said the country's crude production in January-March would be well below output caps, with exports averaging below 7 million barrels per day (bpd).

Oil steadied around its highest prices in three weeks on Monday, supported by comments from Saudi Arabia that it would continue to curb shipments in line with the Opec-led effort to cut global supplies.

On 1 January 2017, after nearly a year of shuttle diplomacy, OPEC and non-OPEC producers reached their first deal since 2001 to reduce oil output jointly by nearly 1.8 million barrels a day.

Oil prices have rebounded to around $70 a barrel as a result of the policy. Analysts had expected an increase of 2.1 million barrels.

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Soaring U.S. production has pressured oil futures at a time when OPEC members and Russian Federation have reduced their output in an attempt to support prices.

United States oil is also increasingly being exported, including to the world's biggest and fastest growing markets in Asia, eating away at OPEC and Russian market share. Mind you, the USA production now stands at highest level since the early 1970s.

Fund positioning remains very stretched with longs outnumbering shorts by a ratio of nearly 10:1, but down from nearly 12:1 at the end of January.

Consider this: in January 2017, USA crude oil production mounted to 8.82 million barrels per day. "We'll see tomorrow what the EIA data says".

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Birol said at an event in Tokyo the United States would overtake Russian Federation as the biggest crude oil producer "definitely next year", if not this year.

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