Oil Price Gains On Strong OPEC Supply Reduction Pact

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US crude oil production is at its highest levels since 1970 and has nearly doubled over the past decade, according to data from the federal Energy Information Administration released Thursday. That translates to at least $75 a barrel for the USA oil benchmark, West Texas Intermediate. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.06%, at $65.84 a barrel. Offshore oil projects authorized well before the oil bust began in 2014 are producing more oil from the deepwater Gulf of Mexico.

With the oil market much more precariously balanced than it was just six months ago, geopolitical events and supply outages are having a much more profound impact on the oil market.

The more oil prices rise, the bigger the eventual response from the shale drillers will be - which is why OPEC and its allies need to start planning an exit strategy from production cuts before they become self-defeating.

WTI prices have been on an upward trend since February 2016. Energy Department and industry experts expect that record to fall soon; they also expect the United States to overtake Russian Federation and Saudi Arabia as the world's biggest oil producer by the end of next year when US output is forecast to hit 11 million barrels a day. Investors have been wary that a bullish tone to 2018 so far would bring shale oil drillers back into play, and the US government has reported that total production bested Saudi Arabia already late past year.

A few major investment banks went back to the drawing board and revised all price targets for the oil price. As a result, the slowdown in USA exports could create an additional factor sup-porting fuel prices in the short term. As disruptive influences have risen in Libya, the frequency of our high impact alerts have increased, along with the price of oil (hark, below).

West Texas Intermediate futures added 0.8% in NY.

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Much of USA production from shale formation has been in light or ultralight sweet crudes, while the vast majority of OPEC's production cuts have come from heavier, sourer grades.

It was the first time domestic crude production has surpassed 10 million b/d since 1970, EIA said in its latest Petroleum Supply Monthly report, which was released Thursday.

The cuts have offset gains in US crude production.

Ongoing optimism that OPEC-led output cuts would also continue supports oil indexes.

US crude, meanwhile, is flowing into global markets.

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