U.S. crude production will climb to record levels over the next two years, the U.S. Energy Information Administration (EIA) said last week, as efficiency gains offset a decline in rig activity. The EIA expects output to hit a record 13.21 million barrels per day (bpd) in 2024.

"U.S. oil production growth was underestimated over the past year. But it will probably slow down because of huge industry consolidation and cost reduction," Mercuria CEO Marco Dunand told Reuters on the sidelines of the World Economic Forum in Davos.

That consolidation included $135 billion of acquisitions by only three companies: Exxon Mobil, Chevron Corp and Occidental Petroleum.

"High U.S. (oil) production growth works well when Chinese demand is growing by 1 million bpd a year. But both Chinese and overall global demand are slowing and will probably grow by 1.5 million bpd this year," Dunand said.

Data on Wednesday showed China's economy grew less than expected in the fourth quarter last year, weighing on oil prices. Brent futures were down a $1.50 at $76.78 a barrel by 1135 GMT.

Geneva-based Mercuria is one of the world's top five oil traders, reaping a record $3 billion in profit in 2022, as well as a major trader in power, natural gas and emissions markets.

The more bearish sentiment is supported by the lack of any material impact on oil output and flows from escalating Middle East tensions and Red Sea attacks so far. Dunand's view was echoed by rival Gunvor.

In the environment of slower demand growth, OPEC needs to show very good compliance with agreed supply curbs, said Dunand.

"The Saudis might need to go further with production cuts if they want to control the price," he added.

OPEC production grew slightly in December, a Reuters survey showed, though the Saudi-led group has so far exceeded its announced cuts.

(Reporting by Dmitry Zhdannikov; Writing by Julia Payne; Editing by David Goodman)

By Dmitry Zhdannikov