Last updateWed, 21 Mar 2018 8pm


EIA: U.S. Oil Output Accelerating

The U.S. Energy Information Administration (EIA) estimates that U.S. crude oil production averaged 10.3 million barrels per day (b/d) in February, up 230,000 b/d from the January level, when there were some well freeze-offs in the Permian and Bakken. EIA has reported that total U.S. crude oil production averaged 9.3 million b/d in 2017, ending the year with production of 9.9 million b/d in December. EIA projects that U.S. crude oil production will average 10.7 million b/d in 2018, which would mark the highest annual average U.S. crude oil production level, surpassing the previous record of 9.6 million b/d set in 1970. EIA forecasts that 2019 crude oil production will average 11.3 million b/d. 

LNG Investment Down in Recent Years

“Investment in new projects to produce liquefied natural gas (LNG) fell sharply in 2016 and 2017: the industry-sanctioned under 10 million tons of annual capacity in two years, an 80 percent reduction relative to 2011–2015,” writes Nikos Tsafos from the Center for Strategic and International Studies.

“This slowdown raises many questions. Is the industry investing enough to meet future demand, and if not, will that lead prices to spike later? Governments are asking whether they should offer concessions to support projects; and if so, how far should they go, especially given pressures from constituents who were promised jobs, investment, and revenue from projects that are now stalled.” 

IEA Sees U.S. Energy Dominance into Next Decade

Oil production growth from the U.S., Brazil, Canada and Norway can keep the world well supplied, more than meeting global oil demand growth through 2020, but more investment will be needed to boost output after that, according to the International Energy Agency’s (IEA) latest annual report on oil markets.

Over the next three years, gains from the U.S. alone will cover 80% of the world’s demand growth, with Canada, Brazil and Norway – all IEA family members – able to cover the rest, according to Oil 2018, the IEA’s five-year market analysis and forecast. But the report finds that despite falling costs, additional investment will be needed to spur supply growth after 2020. 

U.S. Chemical Production Starts the Year on a Soft Note

According to the American Chemistry Council (ACC), the U.S. Chemical Production Regional Index (U.S. CPRI) fell 0.4% in January, following a 2.2% gain in December, and a 1.8% gain in November, as measured on a three-month moving average (3MMA) basis. During January, chemical output fell in all regions, with the largest declines in the West Coast, Midwest, and Mid-Atlantic regions. All data excludes pharmaceuticals.

Chemical production was mixed over the same three-month period. There were gains in the production three-month moving average output trend of other basic inorganic chemicals, industrial gases, fertilizers, synthetic dyes and pigments, and plastic resins. These gains were offset by declines in the output trend in pesticides, manufactured fibers, adhesives, coatings, organic chemicals, chlor-alkali, consumer products, and synthetic rubber. 

Shell Sees Potential LNG Supply Shortage as Demand Surges

The global liquefied natural gas (LNG) market has continued to defy expectations of many market observers, with demand growing by 29 million metric tons to 293 million metric tons in 2017, according to Shell’s 2018 LNG Outlook. Based on current demand projections, Shell sees potential for a supply shortage developing in mid-2020s, unless new LNG production project commitments are made soon.

LNG buyers continued to sign shorter and smaller contracts. In 2017, the number of LNG spot cargoes sold reached 1,100 for the first time, equivalent to three cargoes delivered every day. This growth mostly came from new supply from Australia and the USA. The mismatch in requirements between buyers and suppliers is growing. 



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