USA supply, now close to matching levels of top producers Russian Federation and Saudi Arabia, will likely move oil markets into a supply surplus in the first half of 2018, the International Energy Agency (IEA) said on Thursday.
In the first half of 2018, the agency said, the oil surplus could be 200,000 per day before reverting to a deficit of about 200,000 per day in the second half, leaving 2018 as a whole showing a closely balanced market.
On Wednesday, the U.S. Energy Information Administration reported that U.S. production climbed to a weekly record high last week of 9.78 million barrels a day, building on a string a fresh weekly highs.
But the IEA warned that "when our USA outlook is added to expectations for the other producers, output from non-OPEC countries could rise by 1.6 million per day in 2018, an increase of 200,000 bpd to our [previous] forecast".
The IEA delivered its report on Thursday and says it expects non-OPEC supply to grow by 1.6 million barrels a day in 2018. The IEA said stocks remained 111 million barrels above the five-year average. Chinese crude stocks likely fell in October for the first time in a year.
While the pipeline outage physically mostly affects the North Sea region, it is of global relevance as the crude it supplies is part of the supply that underpins the Brent price In the last 24 hours, a safety cordon around the damaged pipeline has been halved as a crack has not grown. All the results of the outage are seen as helping OPEC in its mission to reduce global inventories. MCX Crude is trading at Rs 3705 per barrel, up 0.35% on the day. The extension of the OPEC/non-OPEC output cuts and, latterly, the closure of the Forties pipeline system were factors. Global margins declined in November, losing nearly $1/bbl.
The IEA said for the time being and in response to the Forties pipeline incident, it has reduced its estimate for United Kingdom production in December by 300 kb/d, and will revisit this as the situation becomes clearer.
Crude oil prices gained more than 2 percent Monday, but erased the gains in the Tuesday session. For the producers at least, 2017 has been encouraging.