Global oil supply rises to highest level in 2017

Global oil supply rises to highest level in 2017

Andrew Cummings
December 14, 2017

On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.1% at $56.56 a barrel.

After averaging $2/Bbl lower than Brent prices through the first eight months of 2017, WTI prices plunged an average $6/Bbl lower than Brent prices from September through November, Kallanish Energy finds.

United States oil supply is now expected to grow by 1.1 million bpd in 2018, an upward revision of 180,000 barrels, according to the report.

The expected non-OPEC oil supply growth for 2017 is an upward revision of 150,000 barrels per day from the previous report.

"After the initial surge that understandably accompanies such a major supply disruption, the market has settled down again and, unless another dramatic event occurs in what remains of 2017, it looks as if the Brent crude price will average about Dollars 54 (per barrel) for the year, an increase of 20 percent on 2016", the IEA said.

Disruption in the North Sea - home to the global Brent price benchmark - can only accelerate the rebalancing process that OPEC is spearheading alongside allies such as Russian Federation.

"We see the spate of supply projects, excluding OPEC countries and the developments in USA shale, taking their toll on the market and keeping prices in check next year", analysts at consultancy JBC Energy wrote in a note.

In a deal struck in November, OPEC and other producers including Russian Federation agreed to extend supply cuts which began in January through 2018 as it targets bringing stocks in the Organization for Economic Cooperation and Development back in line with their five-year average.

The Paris-based IEA said US crude output next year would climb by 870,000 barrels per day (bpd), up from its November forecast of 790,000 bpd.

In a report Wednesday, the U.S. EIA said crude stocks fell 5.1 million barrels in the week ended December 8, however the fall was offset to some extent by gasoline stocks rising by 5.7 million barrels.

For now, Brent prices remain underpinned by an outage on the Forties crude pipeline that is expected to last several weeks.

Gasoline inventories - one of the products that crude is refined into - rose by 5.7 million barrels, well above expectations for rise of 2.5 million barrels, while supplies of distillate - the class of fuels that includes diesel and - fell by about 1.4 million barrels, above expectations for a build of 902,000 barrels.

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