<article><p class="lead">Shale oil output from the US will continue to drive prices as the world's marginal producer, but whether prices remain pressured or gain support from global demand is less clear.</p><p>"As long as global demand is as strong as it is now, there will not be a problem absorbing US shale production," Energy Aspects chief analyst and cofounder Amrita Sen said at the <i>Argus</i> Americas Crude Summit in Houston, Texas. "I do not buy the lower-for-longer thesis."</p><p>Her firm expects US crude exports to grow by 500,000 b/d in 2018 to roughly 1.5mn b/d compared with 2017. That increased flow will not be the result of the US pushing out excess production but because of a "pull arbitrage" from the rest of the world, she said. </p><p>"The rest of the world is really pulling on US crude, rather than the US having to discount," Sen said. </p><p>Declining crude supplies in Brazil and Asian countries, unplanned upstream outages in Yemen, Nigeria and other conflict areas, relatively robust global economic growth and strong Opec compliance -– "even if they cheat a little" -– have reduced the overhang of global oil stocks. Expected refinery capacity expansions of 3mn b/d in 2019 compared with an expected global output increase of 1mn b/d that year will also create a gap to be filled.</p><p>But other analysts take a more bearish view. Bernadette Johnson, vice president of market intelligence for Drilling Info, said that prices could still be pressured by factors closer in, including companies "getting more bang for their buck" by increasing drilling efficiency in shale plays. </p><p>Drilling Intelligence's forecast for the average 2018 WTI price is $52-$60/bl, lower than the current strip indicates, she said.</p><p>Concern over possible increases in drilling service costs and other factors that could drive up prices are "overhyped," she said. "It is still very low cost in the US, which will continue to be the low-cost provider of crude, NGLs and natural gas going forward."</p></article>
