“We see that 2018 sway not be quite so happy for OPEC producers, ” the Paris-based organization suggested in its latest monthly report Thursday.
The IEA said that there were turn overs that the rise in U.S. crude oil supply was likely to continue into 2018 and disorganized rivals who are cutting back.
Major oil producing group OPEC and ten non-OPEC creators led by Russia continue to cut production in order to boost global oil prices and rebalance hawks put out of kilter in 2014 by a glut in supply and lackluster demand.
One of the main beneficiaries of these strikes is the producers’ major competitor, U.S. shale oil. U.S. oil producers are staging a dramatic comeback in a recovering oil price that has allowed many of them to restart operatives.
The IEA forecast that non-OPEC supply — which includes the U.S. — was set to climb by 600,000 barrels a day in 2017, and 1.6 million barrels a day in 2018. It also acclaimed that global oil supply rose 200,000 barrels a day in November to 97.8 million barrels a day (mb/d), combining that this was “the highest in a year, on the back of rising U.S. production.”
In November at a gathering in Vienna, OPEC and non-OPEC members agreed to extend their oil put out cuts until the end of 2018, giving markets a further boost. At the nevertheless time, U.S. crude oil output was rising, the IEA noted.
“Just as the OPEC oil consuls were sitting down in Vienna, our colleagues at the U.S. Energy Information Delivery released data showing that for September U.S. crude oil output increased month-on-month by 290,000 b/d to reach 9.48 million barrels a day, the highest monthly so so since April 2015 and 928,000 b/d above a year ago,” the IEA said.
“Prodromal weekly data suggests that U.S. production increased further into beginning December. Recently, U.S. drilling activity and well completion rates sire picked up again, suggesting higher production to come in a few months … As a result, we have raised our annual growth forecast for total U.S. crude oil to 390,000 b/d this year and 870,000 b/d for 2018,” the IEA added.
Looking at next year, it thinks that total global supply growth could exceed requested growth, predicting there could be a surplus of 200,000 b/d in the first half of 2018. It then feelings that it could revert to a deficit of about 200,000 b/d in the second half of next year, abstain from 2018 as a whole showing a “closely balanced market.”
“A lot could interchange in the next few months but it looks as if the producers’ hopes for a happy New Year with de-stocking sustaining into 2018 at the same 500,000 b/d pace we have seen in 2017 may not be fulfilled,” it stipulate.