17-02-2018

Oil market forecasters diverge on 2018 supply, demand growth

The three most closely watched market forecasters have divergent market outlooks for this year in their most recent monthly reports, with the US Energy Information Administration 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.

“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,” it 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.

OPEC’s forecast for demand for its own crude in 2018 sees a rise of 10,000 b/d on the year, in contrast to falls of 500,000 b/d and 74,000 b/d seen respectively by the IEA and EIA.

But in the past few months, the producer group 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.

All three saw OPEC crude output little changed in January from a month earlier. The EIA saw growth of 0.09 million b/d, OPEC 0.08 million b/d and the IEA said output was flat on the month.

Forecast comparisons – Feb 2018 (mil b/d) OPEC IEA EIA
World oil demand forecast 2017 97.00 97.80 98.50
World oil demand forecast 2018 98.60 99.20 100.23
Non-OPEC supply forecast 2017 57.90 58.20 58.69
Non-OPEC supply forecast 2018 59.30 59.90 61.04
Call on OPEC + stocks forecast 2017 32.85 32.80 32.97
Call on OPEC + stocks forecast 2018 32.86 32.30 32.23
OPEC NGLs forecast 2018 6.50 7.00 6.96
Change from 2017 0.20 0.10 0.12
OPEC crude output in January 32.3 32.16 32.41
Change from Dec 0.08 0.00 0.09
Sources: IEA, EIA, OPEC

Source: Platts

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