Oil price edges lower on anticipated United States production rise

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15 November, 2017

In its drilling productivity report for this month, the U.S. Energy Information Administration said it expected oil production from the seven main inland shale basins to increase about 1.3 percent in December.

"This is the equivalent of adding another China and India to today's global demand", the IEA said in its report.

To be sure, the IEA expects Canadian oil production to rise - to 6.2 million barrels per day by 2040 from 4.5 million bpd in 2016, 100,000 bpd more than the IEA's last report.

"The reality is that even after some modest reductions to growth, non-OPEC production will follow this year's 700,000 bbl/day growth with 1.4m bbl/day of additional production in 2018 and next year's demand growth will struggle to match this", said the IEA.

"A remarkable ability to unlock new resources cost-effectively pushes combined United States oil and gas output to a level 50% higher than any other country has ever managed; already a net exporter of gas, the USA becomes a net exporter of oil in the late 2020s", the IEA said in its 2017 world energy report. And the IEA expects non-OPEC countries to boost output by 1.4 million barrels a day next year, doubling this year's production growth.

Oil prices have risen in recent months, after both Opec and non-Opec countries struck a landmark deal at the end of previous year to cut back production to combat a global oil glut.

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The global energy markets are in the midst of "extraordinary times", writes Fatih Birol, executive director at the International Energy Agency in its annual World Energy Outlook, launched in Paris on Tuesday.

Despite the cautious sentiment, traders said oil prices were unlikely to fall far, largely due to supply restrictions led by the Organization of the Petroleum Exporting Countries and Russian Federation, which have helped reduce excess stockpiles.

A cooling Chinese economy also stoked some concerns about demand, although so far the country's refiners are processing crude oil near record levels of 11.89 million bpd.

Chris Watling, CEO and chief market strategist at Longview Economics, was quoted as saying that the adoption of EVs could lead to global peak oil demand as soon as 2023, which will result in oil prices crashing to $10.

The price of oil has risen more than 30% since June to a two-year high of around $57 a barrel in NY trading amid evidence of stronger economic growth around the world.

Between 2017 and 2040 the IEA estimates that more solar power capacity will be added globally each year than any other source of energy, with an annual average increase of almost 70 gigawatts.


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