Crude oil futures surge to Rs 4245 per barrel

The US oil production exceeded 10 million barrels per day for the first time in four decades

Brent crude traded below $70/bbl as the specter of expanding US supply was weighed against Wall Street banks' growing faith in a price rally. "The torrid pace of production growth of nearly 850,000 bpd since late summer underscores the anti-fragile nature of production in a rising price environment despite a stagnant rig count", RBC analysts said. "Fundamentally speaking, there's a high chance that the USA will boost production and conflicts could also increase among OPEC nations if prices continue to surge".

For the long term, however, Goldman sees Brent heading back to $60 in 2020 due to what it calls the "New Oil Order", which consists of growing production from USA shale and OPEC's eventual exit from its output reduction deal.

However, not all analysts are convinced that America's oil production spurt will continue.

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. Royal Dutch Shell Plc said improved exploration and production lifted its quarterly profit to a three-year high, while refining and trading fell short of expectations as margins shrank.

Industry experts believe the US may be the world's top crude oil producer this year, a possible boon for Oklahoma's energy-reliant economy. That translates to at least $75 a barrel for the USA oil benchmark, West Texas Intermediate. Yet the size of these inventories can not be predicted yet, especially with the long string of draws during the winter, when demand for fuel is usually lower.

In 2017, world production was estimated at 97.3 million b/d, and this could reach more than one hundred million b/d by 2019 depending on the growth in US production and whether OPEC members comply with a 2017 production agreement that curtailed supply. West Texas Intermediate, the US benchmark for the price of oil, was up 0.9 percent to $65.31 per barrel.

BBL Commodities, one of the world's largest oil-focused hedge funds, expects Brent crude to reach $80 this year, up from around $70 in January.

Dear reader, 2016 and 2017 were great for oil prices.

"We need to dig a little deeper, whether it's inventory level by region or by type of crude and make sure that [we] do not supply the market with the wrong type of crude prematurely", Falih told reporters.

Oil prices had earlier been supported by strong compliance with output cuts by OPEC and its ally Russian Federation, as well as expectations for strong demand growth in 2018.

On the supply front, production by Opec rose in January from an eight-month low, as higher output from Nigeria and Saudi Arabia offset a further decline in Venezuela and strong compliance with a supply reduction pact, a Reuters survey showed.

"Russia is now the top producer of the world".

That production growth will be propped up by a growing export market.

The American oil industry is literally swimming in crude, and there is little sign of it ending anytime soon. The deal was signed by Tehran and the US, the UK, Russia, France, China, and Germany.

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