Higher production of light sweet crude from Libya, Nigeria and the US in July could be contributing to a price squeeze between light and medium crudes, the US Energy Information Administration said Tuesday.
Libyan crude output jumped 19% to 1.01 million b/d in July, from 850,000 b/d in June. Nigerian production increased 6% to 1.66 million b/d in July, from 1.56 million b/d a month earlier, EIA said in its Short-Term Energy Outlook.
US crude production increased a more modest 1% to 9.43 million b/d, compared with 9.32 million b/d in June, the report said.
The increases come as voluntary production cuts by OPEC and non-OPEC countries tightens supply of medium sour and heavy sour barrels.
“As a result, over the past several months, the usual premium that light sweet crude oils command over medium and heavy crude oils has declined in many regions around the world,” the report said.
EIA continues to expect US production to rise over the next two years and cross the 10 million b/d threshold in November 2018.
It sees output averaging 9.35 million b/d in 2017, up 20,000 b/d from last month’s outlook, and 9.91 million b/d in 2018, up 10,000 b/d from last month.
“US oil production growth could slow as some US energy companies plan less investment spending for the rest of this year and the number of drilling rigs has recently increased at a slower clip,” EIA Acting Administrator Howard Gruenspecht said in a statement.
OPEC crude production held steady in July at an average 32.93 million b/d, compared with 32.61 million b/d in June, despite the sharp increases in Libya and Nigeria.
Saudi Arabia produced 10.2 million b/d in July, steady from 10.15 million b/d a month earlier.
The agency expects OPEC output to average 32.53 million b/d in 2017 and 32.96 million b/d in 2018.
EIA expects Brent crude prices to average $50.71/b in 2017 and $51.58/b in 2018 and WTI prices to average $48.88/b in 2017 and $49.58/b in 2018 — steady from the agency’s June outlook.