IEA: “2018 not a happy New Year for OPEC”
International Energy Agency forecast that new supply may grow faster than demand in 2018, challenging OPEC’s efforts to deflate global stockpiles
In its monthly report IEA – the agency which advises most major economies on energy policy – noticed signs that may increase the supply of crude oil in the United States in the next year. This new supply could upset OPEC rivals and some large powers outside the group. According to IEA’s data, global crude supplies rose by 200,000 barrels per day, reaching in November 97.8 million barrels per day.
“On our current outlook , 2018 may not necessarily be a happy New Year for those who would like to see a tighter market. Total supply growth could exceed demand growth: indeed, in the first half the surplus could arrive at 200,000 barrels a day before reverting to a deficit of about 200,000 barrels a day in the second half, leaving 2018 as a whole showing a closely balanced market. A lot could change in the next few months but it looks as if the producers’ hopes for a happy New Year with de-stocking continuing into 2018 at the same [500,000 barrels a day] pace we have seen in 2017 may not be fulfilled.” The IEA said in the report.
IEA boosted its 2018 outlook for output from outside the OPEC by 200,000 barrels a day, led by production from U.S. shale drillers. Indeed one of the main beneficiaries of these cuts will be the US shale oil, the main competitor of the producers and co-responsible for the price crisis that exploded in 2014. New supply from competitors including U.S. shale might grow faster than demand next year, contrasting the efforts to drain what remains of a global surplus, the IEA said in its monthly report.
Basically the Paris-based IEA is saying that we are going to have a positive supply balance next year. According to their analysis, in fact, the total growth of global supply could exceed the growth in demand, forecasting a surplus of 200,000 barrels per day in the first half of 2018 and then returning to a deficit of roughly the same size in the second half of next year, which would make 2018 a year marked by a particularly balanced market.
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