‘Big uncertainty’ over US oil output in 2020 will be critically important to oil prices, analysts say

The question of how much crude U.S. producers may be able to add this year could be pivotal for oil prices in 2020, analysts told CNBC, while warning of the potential for “vicious corrections” in the coming months. Speaking to CNBC’s “Squawk Box Europe” on Thursday, Chris Weafer, a senior partner at Macro-Advisory, suggested three “critical factors” were set to have the greatest influence over crude futures this year.

The first two factors were identified as oil demand growth and the current deal between OPEC and its allied partners. The group, often referred to as OPEC+, agreed to cut oil production by an additional 500,000 barrels per day (b/d) from Jan. 1, further deepening their previous cut of 1.2 million b/d.

In such a scenario, Weafer said that, assuming the OPEC+ deal remains in place, oil prices should trade in the $60 to $70 price range. Nonetheless, he warned many were becoming concerned that U.S. production growth might have passed its peak, amid speculation the industry will not be able to increase production at the same rate in 2020 as it has done in previous years. Increased output from shale formations has helped the U.S. to become the world’s largest oil producer and one of the leading exporters. In the last decade, the U.S. has more than doubled oil production to 12.66 million b/d, according to data published by the Energy Information Administration on Tuesday.

International benchmark Brent crude traded at $66.26 Thursday afternoon, up over 0.3%, while U.S. West Texas Intermediate (WTI) stood at $61.11, around 0.1% higher. Brent crude futures remain around 11% lower when compared to an April peak, with WTI down over 7% over the same period.