United States oil heads to Middle East in latest sign of shale's spread

Oil price chart Futures and indexes as of 9.40pm GMT

The Energy Information Administration said USA crude production hit 10.25 million barrels per day last week, up from 9.92 million bpd the week prior.

Surging shale production is poised to push USA oil output to more than 10 million barrels per day - toppling a record set in 1970 and crossing a threshold few could have imagined even a decade ago.

The 1.2-1.8 million-barrels-per-day cut in output, which was enforced from January 2017 in response to a sharp fall in crude-oil prices that hovered around $40 per barrel in late November, had some effect in driving prices higher.

The American Petroleum Institute was said to report U.S. crude stockpiles slid 1.05 million barrels last week, with storage also shrinking at tanks in the key hub of Cushing, Oklahoma.

Between 2010 and 2017, US oil production rose from 5.5 million barrels a day to 10 million bpd - approaching a record set in 1970 - as shale fields in west Texas and North Dakota lured massive new drilling investments. S. crude production soaring past 10 million barrels per day.

In November, oil production surpassed 10 million bpd for the first time since 1970, and neared the all-time output record.

Nationwide inventories probably rose by 3.15 million barrels, according to a Bloomberg survey before a report from the Energy Information Administration due on Wednesday. "This is because USA oil production is now rising so sharply that there is a risk of renewed oversupply if OPEC does not voluntarily renounce market share". Brent crude futures have lost around 4.5% during the week.

Japan's Inpex jumped as much as 4.7% after sliding 4.3% in the previous session. "Financial markets pulled out of the nose dive, although ongoing volatility shows that we are not out of the woods yet".

China has granted crude oil import licenses to independent refineries in the country's northeast since 2015. The purchases of United States oil aren't likely to continue, given the U.A.E.'s own supply, Lipow said. "Crude oil is on its own now, plodding its own path to the downside".

"Now you have a dollar break to the downside which is pushing crude to three-year highs and probably going to push crude over US$70 on WTI". Last month, it forecast a 970,000 bpd year-over-year increase to 10.27 million bpd.

On the whole, while the near term trend still remains positive, oil prices could see a correction given that the last leg of this rally has been driven by dollar weakness rather than oil fundamentals.

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