IEA, EIA, OPEC differ on 2018 supply, demand growth
The International Energy Agency (IEA), US Energy Information Administration (EIA) and the Organisation of Petroleum Exporting Countries (OPEC) have proffered divergent market outlooks for 2018 crude oil supply and demand growth.
In their most recent monthly report, while the US Energy Information Administration is forecasting 2018 to see record US crude production along with a sharp rise in global demand growth, the International Energy Agency, however, adopted a cautionary tone, warning that the second wave of US shale growth could overwhelm the OPEC production cuts and catch oil producers that are “currently sitting on shut-in production capacity” unaware. However, OPEC’s forecast for demand for its own crude in 2018 sees a rise of 10,000 barrels per day on the year, in contrast to falls of 500,000 b/d and 74,000 b/d seen respectively by the IEA and EIA.
“All the indicators that suggest continued fast growth in the US are in perfect alignment; rising prices leading, after a few months, to more drilling, more completions, more production, and more hedging,” IEA said in its recent report.
The EIA, in its Short-Term Energy Outlook, was the most bullish of the three for demand growth, forecasting an increase of 1.73 million b/d in 2018 over 2017’s levels. OPEC and the IEA saw growth of 1.6 million b/d and 1.4 million b/d, respectively.
The oil cartel in the past few months has been lowering the demand forecast for its own crude in 2018, conceding that far more non-OPEC crude would be supplied to the market this year than previously expected.
The EIA had the largest forecast for non-OPEC supply growth in 2018, seeing a rise of 2.35 million b/d. OPEC’s report suggested an increase of 1.4 million b/d, while the IEA was between the two, with a forecast of a 1.7 million b/d gain.
The EIA expects US oil production to average 10.59 million b/d in 2018, which would mark as the highest-ever annual average US crude production, surpassing the previous record of 9.6 million b/d set in 1970.
Meanwhile, oil posted its first weekly increase since last month as rebounding equity markets eased concern about economic growth and a weakening dollar boosted the allure of commodities priced in the US currency.
West Texas Intermediate crude for March delivery added 34 cents to settle at $61.68 on the New York Mercantile Exchange while Brent for April settlement climbed 51 cents to close at $64.84 on the London-based ICE Futures Europe exchange. The global benchmark rose 3.3 percent this week.
FRANK UZUEGBUNAM