Here is the IEA from this month’s Oil Market Report released today:
“On considering the final component in the balance – non-OPEC production – we see that 2018 might not be quite so happy for OPEC producers. Just as the OPEC oil ministers were sitting down in Vienna, our colleagues at the US Energy Information Administration released data showing that for September US crude oil output increased month-on-month by 290 kb/d to reach 9.48 mb/d, the highest monthly average since April 2015 and 928 kb/d above a year ago. Preliminary weekly data suggests that US production increased further into early December. Recently, US drilling activity and well completion rates have picked up again, suggesting higher production to come in a few months. Consequently, we have raised our annual growth forecast for total US crude oil to 390 kb/d this year and 870 kb/d for 2018. Impressive though this seems, according to recent investor updates, the new mantra in the US shale regions is “moderation”, reflecting a desire to greet stronger prices as an opportunity to consolidate rather than to launch yet more headlong expansion. The flexibility and ingenuity of the shale sector raises challenges to forecasters. Even so, when our US outlook is added to expectations for the other producers, output from non-OPEC countries could rise by 1.6 mb/d in 2018, an increase of 0.2 mb/d to our forecast in last month’s Report.
So, on our current outlook 2018 may not necessarily be a happy New Year for those who would like to see a tighter market. Total supply growth could exceed demand growth: indeed, in the first half the surplus could be 200 kb/d before reverting to a deficit of about 200 kb/d in the second half, leaving 2018 as a whole showing a closely balanced market. A lot could change in the next few months but it looks as if the producers’ hopes for a happy New Year with de-stocking continuing into 2018 at the same 500 kb/d pace we have seen in 2017 may not be fulfilled.”
Here is the supply/demand chart showing balance:
Using the CBOE’s oil volatility index Barchart shows vol near the low for 2017:
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