Things You Need To Know From The World Energy Outlook 2017

Things You Need To Know From The World Energy Outlook 2017

A downbeat outlook for oil demand from a top energy watchdog and fears of rising USA output sparked a sell-off in crude futures this week, but analysts say the market was already poised for a pullback.

Brent crude futures were at $61.61 per barrel, down 60 cents, or 1% from their last close.

The IEA's outlook pressures OPEC to keep restraining output in order to defend crude prices, which its members rely on for revenue.

During the week ending on 10 November, commercial crude oil inventories grew by 1.9m barrels from the previous week to reach 459m barrels, according to the Energy Information Administration, the US Department of Energy's statistical arm.

The International Energy Agency (IEA) on Tuesday cut its oil demand growth forecast by 100,000 barrels per day (bpd) for this year and next, to an estimated 1.5 million bpd in 2017 and 1.3 million bpd in 2018.

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.

"The oil market faces a hard challenge in the first quarter of 2018, with supply expected to exceed demand by 600,000 barrels a day followed by another, smaller, surplus of 200,000 barrels a day in the second quarter", the IEA said.

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The report projects that by 2025, oil production in America will match that of Saudi Arabia, and by 2030, it will be exporting 30m barrels of oil and daily - 50% more than the single year yield of any other country in history.

The data also showed distillate stocks in the U.S. Gulf fell to a one-year low, while overall refining rates rose in the latest week, led by a jump in East Coast refining, which is operating at a record 99.8 percent of capacity.

"This is why, absent any geopolitical premium, we may not have seen a "new normal" for oil prices", the IEA said.

“We are now witnessing a period of expansion in US oil and gas production that matches or exceeds any historical records ever achieved by the oil and gas industry, ” said Tim Gould, head of the Energy Supply Outlook division. "This is a continuation of the strong demand growth we are seeing in our short term oil market analysis", the report said.

Meanwhile, domestic USA oil output rose by another 25,000 barrel a day to 9.645m b/d.

The IEA said warmer temperatures could reduce consumption, while sharply rising output from some producer countries might bring back the global crude glut in the first half of 2018.

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