The price of crude oil fell yesterday after a new report from OPEC revealed that its members were increasing production. The biggest gainers in the month were Saudi Arabia, United Arab Emirates, and Libya. This increase was in line with the increase in production from the United States. Yesterday, data from the EIA showed that US crude production reached 11.3 million barrels in August. This made the US the biggest oil producer in the world.
The data showed that the production reached a record high in Texas, North Dakota, New Mexico, Oklahoma, Colorado, and West Virginia. The Permian region accounts for 63% of total crude production in and 95% of total New Mexico production.
While the US oil production has certainly increased in recent years, the demand has also been increasing. In 2017, the country consumed more than 19 million barrels of crude oil every day. This means that the country imports more than 10 million barrels every day. This is the main reason why Trump has found it challenging to impose sanctions on Saudi Arabia over the murder of Jamal Khashoggi. Sanctions on the country would lead to retaliation by Saudi Arabia which may then lead to higher oil prices.
All this is happening a few days before Iran is expected to cease oil exports. Many people believe that the impacts on Iran have already been felt. Therefore, the price could continue to drop until the OPEC members meet in December at Vienna.
With the price of Brent trading at $73 at the time of writing, the pair’s path of least resistance is likely down. This will probably see it test the important support level of $70.
