Trump shocks oil industry as U.S. sells oil to Arabs

Crude Oil Price Tests Key Trendline As Market Vol Spikes

According to the agency's short-term energy outlook, Brent crude oil is forecast to average $62.39 per barrel in 2018, against EIA's Januray projections of $59.74/bbl.

NEW YORK, Feb 7 (Reuters) - Oil prices fell to a one-month low on Wednesday, after US data showed an unexpected build in refined products, fanning fears of oversupply headed into the slow demand season and offsetting a bounce after the largest British pipeline shut for the second time in three months.

Crude oil prices saw fifth consecutive month of gains in January amid a tightening physical market and inventory drawdowns.

Rising U.S. oil production has been looming over the market, with output up by 1 million bpd in the past year to about 10 million bpd. At the time of writing, West Texas Intermediate traded at US$63.84 per barrel, with Brent at US$67.55 a barrel.

USA crude production jumped to a record 10.25 million barrels a day last week, the most in Energy Information Administration data going back to 1983.

The EIA's weekly data came on the heels of an upwardly revised forecast for total USA production this year and next.

Crude Oil Price Tests Key Trendline As Market Vol Spikes
China's crude futures set for March 26 launch

The EIA also said USA crude stockpiles rose by 1.9 million barrels last week. Motiva Enterprises LLC, the largest USA refinery, started a planned one-month overhaul on Monday of its key crude processing unit at its 603,000 barrel-per-day facility in Port Arthur, Texas.

The U.S. also made it once into China's top ten suppliers list past year - in October - when it was ninth in terms of crude oil sales to China.

Crude is struggling to extend last month's largely dollar-driven gains on speculation that U.S. output will impede efforts by the Organization of Petroleum Exporting Countries (OPEC) to drain a glut. The EIA had previously expected production to reach 11.04 million bpd in the fourth quarter of 2019. While shale producers in the United States essentially require oil prices to remain at around the $50-per-barrel region to cover their production costs and the high-yield bonds used for financing, OPEC will do all it can to ensure that oil prices are tightly balanced, thereby discouraging additional entrants into the market, as they have already seen their market share dwindle in the wake of USA crude-oil producers. US crude total inventory stood at 411.6 million barrels, the lowest since February 2015.

Net U.S. crude imports fell last week by 60,000 barrels per day.

Supporting the crude oil markets, the expanding global economy has increased demand for commodities and drawn down oil inventories.

The recent production number report has surpassed Saudi Arabia's production average of 9.92 million barrels per day back in December according to the OPEC's monthly oil market report data which was released last month. The purchases of United States oil aren't likely to continue, given the U.A.E.'s own supply, Lipow said. Exports of refined products fell by 449,000 barrels a day last week to 4.44 million.

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