USA to Unleash 'Major Second Wave' of Fracked Oil

Middle East Instability Props Oil Price Close to All Time High

According to the forecast of the IEA, the USA already this year may outstrip Russian Federation in oil production.

United States oil production has been booming in recent years, in areas like North Dakota to the Northeast. Global demand will increase almost 7 million barrels per day by 2023 to 104.7 million barrels per day, the report said, with China the main proponent of growth in demand. However, while oil production in the countries which are part of the OPEC deal is declining, oil production in other countries, especially in the United States, is growing.

Barkindo made the invitation while attending a dinner with the oil executives at the CERAWeek energy conference in Houston; there, he expressed his admiration for the ability of the Americans to rebound from the crude downturn by remarking, "The entire industry could learn something from them: they are able to raise production and raise efficiency, [and] it's something we in the industry need to learn". "Without large-scale capital investment, the US domestic market can only absorb about a quarter of the additional four million b/d of USA crude expected to enter markets [by] 2023, leaving the rest for exports", Wood Mackenzie said. He noted the global petrochemical sector is "one of the blind spots of the oil market debate", with the IEA projecting new petrochemical capacity to represent 25% of oil-demand gains by 2023, driven by projects in the U.S. and China. Cheniere Energy Inc. is also advancing plans to export LNG from a new terminal near Corpus, with the first train ready in 2019. Saudi led OPEC and Russian Federation to agree to cut oil production by 1.8 million barrels per day when oil prices turned down in 2014.

What causes scepticism is the prediction that in the next five years, the United States will take the world reins in oil production.

However, despite falling costs, additional investment will be needed to spur supply growth after 2020, said IEA.

World oil indexes started this week with a slight upward movement supported by news that Libya's largest oil field was temporarily idled, as well as forecasts that USA crude inventories may have posted a surprise decline last week. Global demand growth would average only 1.1%. Environmentally minded Chinese energy policies encourage the use of commercial vehicles that burn natural gas, and growth in gasoline demand is expected to slow. In particular he thinks that crude oil has been struggling to consolidate around 70 dollars per barrel but the thing is that even the world's biggest oil producers and exporters don't believe in high oil prices in the future. "More investments will be needed to make up for declining oil fields - the world needs to replace 3m bpd of declines each year, the equivalent of the North Sea - while also meeting robust demand growth".

IEA's annual forecast also examines crude quality issues arising from the rapid increase in US production, changing trade flows and a growing global refining capacity surplus.

The rise of the USA and the slightly weaker prospects for global demand growth are not particularly good news for the OPEC.

"People are waiting to see: Will storage volumes point toward a tighter fundamental outlook?" said Gene McGillian, a market research manager at Tradition Energy in Stamford, Connecticut.

The return of some geopolitical risks from the Middle East and Venezuela plus real threat of trade wars proclaimed by Trump administration may provoke possible ral-ly on global fuel market. "With seaborne oil traveling longer distances, energy security, one of the IEA's core missions, will remain as critical as ever".

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