Opec’s price nightmare coming true

london — The latest surge in US oil output will probably hasten the country’s rise to the top of the producer pile. More important, it’s starting to look as though at least half of Opec’s nightmare scenario for 2018 — a surge in shale output and slowdown in demand growth — is coming true.

Last week’s avalanche of releases from the US Department of Energy showed daily oil production above 10 million barrels a day for the first time since 1970.

A massive week-on-week jump of 332,000 barrels a day must be treated with caution, though. US drillers didn’t have a sudden rush of enthusiasm as WTI prices broke through a psychological $65 ceiling. Rather, the weekly data, which aren’t revised retrospectively, are catching up with monthly estimates that give a more accurate picture of output.

For much of last summer, the weekly data were heavily criticised for over-estimating US output growth. Now, the reverse is true.

Assessments of the output in October and November based on the weekly data were about 370,000 barrels a day lower than the monthly figures, which are published with a two-month lag. There was probably a discrepancy too in December and January.

The production surge shown in the monthly data is unprecedented. Output rose by almost 850,000 barrels a day between August and November. It makes the first shale boom of 2014-15 look sluggish.

10M barrels a day uS production last week