Global oil market seen balanced in 2018, even with
rising output: IEA
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[October 12, 2017]
By Amanda Cooper
LONDON (Reuters) - Global supply and demand
for crude oil will be largely balanced next year, as growth in
consumption helps erode a three-year-old overhang of unused fuel and
should mostly offset a steep rise in output, the International Energy
Agency said on Thursday.
In its monthly oil market report, the Paris-based IEA said it continues
to see global demand for crude growing by 1.6 million barrels per day
(bpd) in 2017, before moderating to 1.4 million bpd in 2018.
"Looking into 2018, we see that three quarters out of four will be
roughly balanced -- again using an assumption of unchanged OPEC
production, and based on normal weather conditions," the agency said.
"Taking 2018 as a whole, oil demand and non-OPEC production will grow by
roughly the same volume and it is this current outlook that might act as
the ceiling for aspirations of higher oil prices."
Commercial oil stocks likely fell in the third quarter of this year,
only the second draw since the crude price crashed in 2014, thanks to a
drop in the amount of oil held in floating storage or in transit, the
Commercial stocks in industrialized countries fell in August by 14.2
million barrels to 3.015 billion barrels, leaving a surplus of 170
million barrels above the five-year average, the IEA said.
However, the IEA said its numbers implied a build of up to 800,000 bpd
could take place in the first quarter of next year, meaning the
Organization of the Petroleum Exporting Countries and its partners
cannot afford a slip in adherence to their supply-restraint deal.
"WHATEVER IT TAKES"
OPEC supply was little changed in September at 32.65 million bpd, but
down 400,000 bpd from a year earlier, meaning the group's compliance
with its self-imposed 1.2-million bpd output cut stood at 88 percent
last month and 86 percent for the year to date, the IEA said.
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An Iraqi worker opens a
pipe at Sheaiba oil refinery in Basra, 550 km (340 miles) south of
Baghdad, March 29, 2007. REUTERS/Atef Hassan
Together with its partners, which include Russia, Oman and Kazakhstan, the group
has agreed to restrain output by 1.8 million bpd until March next year.
"There is little doubt that leading producers have re-committed to do whatever
it takes to underpin the market and to support the long process of rebalancing,"
the agency said.
"A lot has been achieved towards stabilizing the market, but to build on this
success in 2018 will require continued discipline."
The IEA said it expects demand for OPEC's crude to rise to 32.98 million bpd in
the fourth quarter of this year, above September's output, and then to fall to
31.87 million bpd in the first three months of 2018.
The IEA said it sees non-OPEC crude supply rising by 700,000 bpd in 2017, and by
1.5 million in 2018 to reach 59.6 million bpd, with the United States being the
"Production likely rebounded in the North Sea and in Brazil, while the continued
ramp-up of production from new fields in Kazakhstan, Ghana and Congo also
contributed. At 57.9 million bpd, total non-OPEC output stood 975,000 bpd above
a year earlier," the agency said.
U.S. crude production, aided in large part by resurgent shale output, grew by
550,000 bpd in July compared with a year earlier to 9.24 million bpd, its
highest since November 2015.
The impact of Hurricane Harvey, which hit the U.S. Gulf Coast in late August, is
expected to have curtailed production in August and September.
But for 2017 as a whole, the IEA expects U.S. crude output to grow by 470,000
bpd and by 1.1 million bpd in 2018.
(Reporting by Amanda Cooper; Editing by Dale Hudson)
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