EIA raised its US 2021 crude production estimate to 11.15 million BPD
WTI crude oil prices are trading near $63.55 per barrel and trading weak from the last three sessions from a recent high of $67.88 per barrel registered on Mar. 8 2021.
Crude oil prices fell after Libya's National Oil Company vowed to raise crude production this year. Additionally, EIA in its monthly Short Term Energy Outlook raised its U.S. 2021 crude production estimate and cut its 2021 U.S. gasoline demand estimate.
Libya has expanded its crude output to 1.3 million BPD from nominal levels last September, and Libya's National Oil Company chairman, Sanalla said that Libya would raise its crude production to 1.45 million BPD by the end of this year. Higher production is bearish for crude oil prices.
Additionally, the EIA in its monthly Short Term Energy Outlook raised its U.S. 2021 crude production estimate to 11.15 million BPD from a Feb forecast of 11.01 million BPD and also cut its U.S. 2021 gasoline demand forecast to 8.60 million BPD from a February estimate of 8.62 million BPD. Increasing oil production and lower demand estimates are likely to keep a cap on crude oil prices.
Crude oil prices received support from the recent OPEC+ meeting held on Mar. 4 2021. OPEC members decided that they would be sticking with the output cuts that have buoyed the market so far this year. Also Saudi Arabia’s pledge to extend a unilateral 1 million barrel-a-day cut through at least April.
On the supply-side, crude oil production for OPEC members in February fell 920,000 BPD to a 4-month low of 24.87 million BPD. However, Iraq February crude exports excluding Kurdistan rose +3.1% m/m to 2.96 million BPD.
Baker Hughes reported on Friday that active U.S. oil rigs rose by +1 rig in the week ended Mar. 5 to a 10- month high of 310 rigs, well above August's 15-year low of 172 rigs.
Meanwhile, API reported that U.S. crude inventories surged +12.8 million bbl last week and gasoline supplies fell -8.5 million bbl last week as per estimates. The official inventory report will be released later today by EIA.
The consensus is for Wednesday's weekly EIA crude inventories to climb +3.0 million bbl. As per the previous EIA report, US crude oil inventories as of Feb. 26 were +3.6% above the seasonal 5-year average, gasoline inventories were -3.2% below the 5-year average, and distillate inventories were -2.5% below the 5-year average.
WTI Crude oil prices are likely to find a strong support base around $60.35 per barrel while key resistance levels are seen around $67.20-$68.90 per barrel level.