Surpassing
Saudi
U.S. oil output will
surge to 13.1 million barrels a day in 2019 and plateau thereafter, according
to the IEA, a Paris-based adviser to 29 nations. The country will lose its
top-producer ranking at the start of the 2030s, the agency said in its World
Energy Outlook in November.
“It’s very likely the
U.S. stays as No. 1 producer for the rest of the year” as output is set to
increase in the second half, Blanch said. Production growth outside the U.S.
has been lower than the bank anticipated, keeping global oil prices high, he
said.
Partly as a result of the
shale boom, WTI futures on the New York
Mercantile Exchange remain at a discount of about $7 a barrel to
their European counterpart, the Brent contract on ICE Futures Europe’s London-based
exchange. WTI was at $103.74 a barrel as of 4:13 p.m. London time.
Islamist
Insurgency
“The shale production
story is bigger than Iraqi production, but it hasn’t made the impact on prices
you would expect,” said Blanch. “Typically such a large energy supply growth
should bring prices lower, but in fact we’re not seeing that because the whole
geopolitical situation outside the U.S. is dreadful.”
Territorial gains in
northern Iraq by a
group calling itself the Islamic State has spurred concerns that oil flows
could be disrupted in the second-largest producer in the Organization of
Petroleum Exporting Countries after Saudi Arabia. Exports from Libya have been
reduced by protests, while Nigeria’s
production is crimped by oil theft and sabotage.
Libya will resume exports
as soon as possible from two oil ports in the country’s east after taking back
control from rebels who blocked crude shipments for the past year, Mohamed
Elharari, spokesman for the state-run National Oil Corp., said by phone yesterday
from Tripoli.
The U.S. will consolidate
its position as the world’s biggest producer in the coming months if returning
Libyan supply limits the need for Saudi barrels, said Julian Lee, an oil
strategist who writes for Bloomberg News First Word. The observations he makes
are his own.
Record
Investment
“There’s a very strong
linkage between oil production growth, economic growth and wage growth across a
range of U.S. states,” Blanch said. Annual investment in oil and gas in the
country is at a record $200 billion, reaching 20 percent of the country’s total
private fixed-structure spending for the first time, he said.
A U.S. Commerce
Department decision to allow the overseas shipment of processed ultra-light oil
called condensate has fanned speculation the nation may ease its four-decade
ban on most crude exports. Pioneer Natural Resources Co. and Enterprise
Products Partners LP will be allowed to export condensate, provided it is first
subject to preliminary distillation, the companies said June 25.
The decision was “a
positive first step” to dispersing the build-up of crude supply in North America, Bank of
America said in a report on June 27. The U.S. could potentially have daily
exports of 1 million barrels of crude, including 300,000 of condensate, by the
end of the year, according to a June 25 report from Citigroup Inc.
