Tags: RBC | oil | production | prices

RBC: US Oil Production Boom Won't Push Prices Much Lower

Monday, 10 Feb 2014 08:29 AM

By Dan Weil

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The explosion of U.S. oil output won't push prices much lower, according to analysts at RBC Capital Markets.

They forecast West Texas Intermediate oil prices will trade largely between $92 and $94 this year and next, CNBC reports. March WTI settled at $99.88 Friday.

U.S. oil production has soared by almost 50 percent from its 2008 low, to 8 million barrels per day. Thanks to the shale boom, output could increase by at least 700,000 barrels per day each year through 2016, according to RBC, CNBC reports.

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The United States will likely become the world's biggest oil producer late that year, the analysts say. They see daily U.S. output reaching 11 million barrels in 2018, well above its 1970 record of 9.6 million barrels.

But the rest of the world will absorb the increased U.S. production "with only modest price impact" during the next year, according to RBC.

U.S. oil could partly replace supplies from OPEC members Libya and Iraq, whose outputs are depressed in the face of social turmoil. "We see OPEC continuing to cede market share to the U.S. in the near to medium term," the RBC analysts say.

The cold winter weather in much of the country has boosted crude in recent days.

"The winter weather remains supportive, as temperatures in the Northeast will remain upward of 10 degrees below normal over the next several days," according to The Kilduff Report, edited by Michael Fitzpatrick, The Associated Press reports.

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