Oil prices are in a ‘sweet spot,’ but for 2 risky reasons

FAN Editor

You could call it a crude reality.

Oil prices inched higher Tuesday, rising on OPEC‘s newly extended production cuts and tensions with Iran, but still under pressure from demand concerns tied to slowing global growth and the trade dispute between the U.S. and China.

That push-and-pull dynamic is putting crude prices in a unique kind of “sweet spot,” said Amy Harder, energy reporter at Axios.

“We really are in this Goldilocks moment of oil prices, and therefore gasoline prices, here in America, and Iran is just one part of the two big pressure points that are countervailing each other,” Harder said Tuesday on CNBC’s “Futures Now.”

“A decade ago, or even a few years ago, oil prices would probably be a lot higher,” even with these same concerns, Harder said. “But because of this slowing economic growth and, of course, the boom in American oil production over the last decade, we’re seeing prices more tempered despite the fact that there’s all this unrest and uncertainty going on.”

Harder spoke shortly after the U.S. Energy Information Administration, a statistics-focused offshoot of the Department of Energy, released its short-term energy outlook. The report showed U.S. oil production booming, particularly in the oil-rich area of western Texas known as the Permian Basin.

“That report … finds that [U.S.] oil production is continuing to break records,” Harder said. The agency estimated that U.S. production totaled 11 million barrels per day in 2018, an all-time high for production and year-over-year growth.

“It should be 13 million barrels a day in the next year, and that’s more than double what it was just a decade ago,” she said. “That’s significant.”

The U.S. is also boosting its standing in the petroleum market, becoming a net exporter of petroleum-based products rather than an importer, based on the EIA report.

“Now, that’s a significant turnaround, again, from the last decade when we were significantly dependent upon oil from the Middle East, and so that continues to be the case,” Harder said. “It’s just staggering how [U.S. production] continues to increase, and it isn’t seeing any signs of … slowing.”

Next on the docket for the energy market is the widely watched International Energy Agency report this Friday, in which Harder anticipates more data showing a downtick in demand due to high U.S. output.

“We are seeing slower demand growth, and much of that is coming from the United States as OPEC is moving from this leader position in the market to more of a manager position as the U.S. just continues to pump out more oil,” she said.

U.S. oil prices climbed to just under $58 a barrel late Tuesday afternoon. Brent crude, the international benchmark, rose to the $64 level.

Disclaimer

Free America Network Articles

Leave a Reply

Next Post

U.S. man accused in theft at North Korean Embassy in Madrid ordered freed on bail

A combination photo of former U.S. Marine Christopher Philip Ahn allegedly shown in a still photos from a surveillance camera, standing in front of and entering the North Korea embassy in Madrid, Spain, February 22, 2019. U.S. Attorney’s Office Central District of California/Handout via REUTERS July 9, 2019 By Alex […]