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Published: Wed, January 10, 2018
Economy | By Melissa Porter

Forecast predicts two years of record USA oil production

Forecast predicts two years of record USA oil production

Oil prices closed at fresh three-year highs Tuesday, as geopolitical risk and confidence in global growth continued to buoy markets.

West Texas Intermediate (WTI) for February delivery added 29 cents to settle at $61.73 a barrel on the New York Mercantile Exchange. It tapped a high of $62.56-the highest intraday level since late 2014.

Despite this, United States production is expected to break through 10-million barrels a day very soon, largely thanks to soaring output from shale drillers.

WTI crude will average $55.33 a barrel this year, the EIA said, up from last month's estimate of $52.77, and $57.43 in 2019.

Mr. Trump's decision comes on the heels of antigovernment protests in Iran last week, which also boosted the price of crude.

A third OPEC source said market fundamentals did not justify the price rally.

This week's supply reports from the American Petroleum Institute and the USA government's Energy Information Administration are predicted to reveal that us crude stocks dropped by 4.1 million barrels, an eighth week of decline.

A key USA government report on Wednesday is expected to show crude stockpiles dropped for an eighth straight week.

On Tuesday, the price of oil climbed higher reaching its highest level seen since May 2015, propped up by OPEC-led production cuts and the belief that USA crude inventories have fell the eighth week in a row.

OPEC members don't want Brent oil to rise above $60 a barrel because higher prices could bring more supply from shale output, Iran's oil minister said.

Standard Chartered expects oil demand growth to outpace supply growth from non-OPEC countries in both 2018 and 2019, continuing to be the main supporter of prices, analysts wrote Tuesday.

"Production cuts and demand are continuing to rebalance the market". OPEC and 10 members outside the cartel agreed late last year to extend an accord to hold down crude output by almost 2% through the end of this year.

Some in OPEC are anxious a prolonged rally could stimulate more US shale oil output, however, creating more oversupply that could weigh on prices and market share.

Nationwide output will average 10.85 million barrels a day next year and 10.27 million this year, both surpassing the prior record of 9.6 million pumped in 1970, the Energy Information Administration said in its monthly Short-Term Energy Outlook, which included the first estimates for 2019.

Gasoline futures gained 2.5% to $1.8362 a gallon and diesel futures rose 1% to $2.0662 a gallon.

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