US shale oil companies will help production from outside the Opec cartel to grow faster than initially expected next year, with global supply and demand not forecast to balance until late 2018, the International Energy Agency said.
The Paris-based body said in its monthly oil market report, published on Thursday, that US drilling and well completion rates have picked up as prices have rebounded, meaning output is set to rise.
The uptick in production will be watched closely by oil forecasters and global producers, led by the Opec cartel and Russia, which joined forces last month to extend an agreement to curb supplies through 2018.
The coordinated effort has helped to raise oil prices above $60 a barrel but has prompted some participants of the agreement to question if shale producers could undermine the deal to further shrink global supplies.
“2018 might not be quite so happy for Opec producers,” the IEA said. Hopes that inventories will shrink at the same pace as this year, “may not be fulfilled.”
Total supply growth could exceed demand growth in the coming months, with the IEA calculating an oil surplus of 200,000 barrels a day in the first half of 2018 before the market sees a deficit of 200,000 b/d later next year.
This would leave 2018 as a whole “showing a closely balanced market”. The IEA acknowledged statements from US shale producers suggesting they are searching for value over volume, with companies no longer seeking “headlong expansion”.
Still, the IEA said, “the flexibility and ingenuity of the shale sector raises challenges to forecasters” echoing a report from Opec’s research arm published on Wednesday. The body raised US crude oil growth to 390,000 b/d this year and 870,000 b/d for 2018.
Non-Opec output, led by the US, will expand by 630,000 b/d in 2017, followed by an increase of 1.6 mb/d during 2018 which is an uptick of 200,000 b/d from prior forecasts. Meanwhile, Opec crude supply fell in November for the fourth consecutive month to 32.4m b/d. Commercial oil stockpiles in industrialised nations fell 40.3m barrels in October to 2.9 billion barrels, their lowest level since July 2015.
They are now 111m barrels above the five-year average, which global producers are targeting. The IEA maintained its forecast for global demand growth at 1.5m b/d in 2017 and 1.3m b/d for 2018.
Source: FT.com
