Oil demand will surpass supply in the second half of this year, but excess reserves will continue to exist in 2018, affecting global oil producers to reduce production with an aim to cope with excessive inventories.
In its monthly market report, which includes forecasts for next year, the International Energy Agency (IEA) said: “The outlook for 2018 should be acted sobering to those producers who want to reduce supply.”
OPEC and Russia this year teamed up to reduce production, and hence the surplus in the market, which puts pressure on prices. The producers agreed in May extending the deal to limit production for another nine months, while Shale production in the US is accelerating and the countries excluded from the agreement, acquire more.
IEA expects global demand to increase by 1.4 million. Barrels per day next year compared with an increase of 1.3 million barrels a day in 2017, as China and India will increase their consumption to a record 99.3 million barrels per day.
The growth of production in non-OPEC countries in 2018, however, led by the US, will surpass demand growth. The forecast indicates that it will increase by 1.5 million. Barrels per day, which is more than twice faster growth than this year.
Shale production in the US is the most serious cause. The forecast indicates that it will expand to 780 thousand. Barrels next year after rising by 430 thousand. Barrels in 2017. “The dynamics of this exceptional, very diverse industry is such that it is possible growth may be even faster” IEA says.
OPEC and Russia said they would try to reduce the world’s oil reserves to the five-year average. Currently they have 292 million. Barrels over this.
“Incorporating scenario in which OPEC countries continue to fulfill its agreement for production, reserves can not fall to the desired level until the deadline of the deal in March 2018,” the IEA said.
The forecast contradicts the expectations of a deficit of the oil market in the second half of this year, when demand is generally stronger.
The production of crude oil from OPEC increased by almost 300 thousand. Barrels per day in May to around 32m. Barrels per day – the highest level this year as riddled with conflicts Libya and Nigeria, which are excluded from the transaction cartel They have produced more. The total production of OPEC is still lower than 33 million. Barrels per day produced in the last three months of last year.
“Maybe the mantra reads” everything you need “but the current form of” everything “no expected impact quickly,” said IEA regarding the statement of the Saudi energy minister in correcting market imbalances.
“Usually our advice is that we need patience with the required rebalancing of the market for oil, and the new data make us repeat this message,” the agency adds.