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Rising U.S. crude oil production weighed on oil prices throughout 2019, and combined with the weak demand growth last year, booming American oil output resulted in lower average oil prices in 2019 compared to 2018, the U.S. Energy Information Administration (EIA) said on Tuesday.
Brent Crude prices averaged US$64 a barrel last year, which was US$7 per barrel lower than the international benchmark’s 2018 average price. The price of WTI Crude averaged US$57 per barrel in 2019, also US$7 a barrel lower than in 2018, EIA’s data showed.
Oil prices traded in a narrow range last year, as continuously growing U.S. production and weakening demand growth offset bullish factors such as OPEC’s ongoing production cuts and geopolitical flare-ups in the Middle East. The Brent price range last year was just US$20 a barrel—the narrowest range in which the benchmark has traded since 2003, according to the EIA. WTI Crude prices ranged between US$47 and US$66 per barrel.
Despite the narrowest trading range in more than half a decade, last year saw the largest single-day price spike since 2008—this happened on the first trading day following the attacks on Saudi Arabia’s oil facilities in the middle of September which cut off some 5 percent of the daily global supply for weeks.
The price hike was short-lived amid assurances from the Saudis that they would quickly restore supply and amid the prospects of very weak demand growth as the U.S.-China trade war raging.
Booming U.S. production also likely limited the impact of the attacks on oil prices, the EIA said. America’s crude oil production also likely offset the efforts of OPEC and its Russia-led allies to curtail supply to support prices, as well as the U.S. sanctions on Iran and Venezuela’s crude oil exports.
The EIA expects U.S. crude oil production to have averaged 12.3 million bpd in 2019, easily making the U.S. the world’s top crude oil producer.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.