Oil output set to outpace demand in 2018: IEA

Dhaka,  Sun,  23 July 2017
Published : 14 Jun 2017, 21:42:15
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Oil output set to outpace demand in 2018: IEA

Prices fall as OPEC production, US crude stockpiles rise
PARIS, June 14 (AFP): Global oil output will outstrip demand next year, primarily as US producers rack up production, which will hamper exporters' efforts to prop up prices, the IEA said Wednesday.

A day after OPEC complained that increased output in the US was slowing efforts to rebalance supply and demand in the oil market, the IEA also suggested that the dynamism of US producers could prove a headache for exporters.

"In 2018, we expect non-OPEC production to grow ... slightly more than the expected increase in global demand," the International Energy Agency wrote in its latest monthly report.

"Our first look at 2018 suggests that US crude production will grow year-on-year ... but such is the dynamism of this extraordinary, very diverse industry it is possible that growth will be faster," the report said.

"Our first outlook for 2018 makes sobering reading for those producers looking to restrain supply," the IEA said.

Originally, OPEC members had agreed to cut production for six months beginning from the start of the year in a bid to reduce the glut of oil supplies on the shore up prices. Non-cartel producers led by Russia partially matched the cuts.

The measures helped stabilise oil prices at the beginning of the year, with the international benchmark Brent crude sticking above $50 per barrel.

And at a meeting at the end of May, both OPEC and non-OPEC countries decided to roll over the output cuts for a further nine months. Nevertheless, dynamic growth in output in the US, particularly by shale producers, seems to be slowing down the rebalancing process.

And Brent has dropped back below $50 since the OPEC meeting.

Reuters from London adds: Oil prices fell on Wednesday after industry data showed a build in US crude stocks and OPEC reported a rise in its production despite a pledge to cut output.

Brent crude oil LCOc1 was down 45 cents a barrel at $48.27 by 0755 GMT. US crude CLc1 was 50 cents lower at $45.96.

Crude prices have fallen more than 10 per cent since late May, pulled down by heavy global oversupply that has persisted despite a move led by the Organisation of the Petroleum Exporting Countries to curb production.

OPEC and other exporters such as Russia have agreed to keep production almost 1.8 million barrels per day (bpd) below the levels pumped at the end of last year and not to increase output until the end of the first quarter of 2018.

But adherence to the cuts is under scrutiny and the producer group said this week that its output rose by 336,000 bpd in May to 32.14 million bpd.

Oil stocks are near record highs in some parts of the world, and producers that are not part of the OPEC deal are increasing output.

Shale supply has pushed US crude production up by about 10 per cent over the last year to 9.3 million bpd - not far below the output of top exporter Saudi Arabia. C-OUT-T-EIA.
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