According to the latest monthly report from the International Energy Agency (IEA), the global outlook for oil markets in 2018 could put a dampener on hopes for higher prices.
The IEA said in its closely-watched report published on Thursday that sluggish growth in demand, rising non-OPEC production and global stock builds could weigh on the oil price.
It saw that "three quarters out of four will be roughly balanced — again using an assumption of unchanged OPEC production, and based on normal weather conditions", the IEA said looking into oil supply and demand balances in 2018.
"However, our current numbers for the first quarter of 2018 imply a stock build of up to 0.8 million barrels a day (mb/d). Taking 2018 as a whole, oil demand and non-OPEC production will grow by roughly the same volume and it is this current outlook that might act as the ceiling for aspirations of higher oil prices," it added.
"Leading oil producers will have looked at their market balances and probably drawn the same conclusion," it added.
Recently the OPEC said that the global oil market is rebalancing following several years of low prices on the back of a glut in supply and the latest monthly report from the IEA comes amid such optimistic comments from the major oil producer group.
In order to curb global oil output in a bid to support prices that have fallen from a lofty height of $114 a barrel in June 2014, OPEC and non-OPEC oil producers, including Russia, agreed a historic deal last November.
This rebalancing was happening, slowly, said Neil Atkinson, head of the oil industry and markets division at the IEA.
"But the main point is that it (the rebalancing) is happening more slowly than most of the producers who signed up to output cuts perhaps expected when they signed the agreement," he said.
"But it is happening, slowly and gradually. The surplus of oil stocks over a five-year average in the OECD (Organization for Economic Co-operation and Development countries) is gradually coming down so the trend is moving in the right direction from the producers' point of view."
2018 could perhaps be "a little more challenging for them than they might have thought but the tendency in 2018 will be for a balanced market," he noted.
With OPEC potentially announcing a move when it meets at the end of November, it is widely expected that OPEC and Russia will extend the deal even though the deal is currently due to last until March 2018.
The IEA agreed, saying that "the next few weeks ahead of the producers' meeting in Vienna on November 30 will be crucial in shaping their decision on output. A lot has been achieved towards stabilizing the market, but to build on this success in 2018 will require continued discipline."
With West Texas Intermediate is fetching $50.97 a barrel and West Texas Intermediate is fetching $50.97 a barrel West Texas Intermediate is fetching $50.97 a barrel, crude oil prices are still a long-way off previous levels even though prices have recovered from lows around the mid $20s seen in early 2016.
"Reflecting relatively weak July and August data and the impact of hurricanes in September," the IEA noted that the pace of growth had slowed into the third quarter following what it called "very strong year-on-year growth" in the second quarter of 2017.
(Source:www.cnbc.com)
The IEA said in its closely-watched report published on Thursday that sluggish growth in demand, rising non-OPEC production and global stock builds could weigh on the oil price.
It saw that "three quarters out of four will be roughly balanced — again using an assumption of unchanged OPEC production, and based on normal weather conditions", the IEA said looking into oil supply and demand balances in 2018.
"However, our current numbers for the first quarter of 2018 imply a stock build of up to 0.8 million barrels a day (mb/d). Taking 2018 as a whole, oil demand and non-OPEC production will grow by roughly the same volume and it is this current outlook that might act as the ceiling for aspirations of higher oil prices," it added.
"Leading oil producers will have looked at their market balances and probably drawn the same conclusion," it added.
Recently the OPEC said that the global oil market is rebalancing following several years of low prices on the back of a glut in supply and the latest monthly report from the IEA comes amid such optimistic comments from the major oil producer group.
In order to curb global oil output in a bid to support prices that have fallen from a lofty height of $114 a barrel in June 2014, OPEC and non-OPEC oil producers, including Russia, agreed a historic deal last November.
This rebalancing was happening, slowly, said Neil Atkinson, head of the oil industry and markets division at the IEA.
"But the main point is that it (the rebalancing) is happening more slowly than most of the producers who signed up to output cuts perhaps expected when they signed the agreement," he said.
"But it is happening, slowly and gradually. The surplus of oil stocks over a five-year average in the OECD (Organization for Economic Co-operation and Development countries) is gradually coming down so the trend is moving in the right direction from the producers' point of view."
2018 could perhaps be "a little more challenging for them than they might have thought but the tendency in 2018 will be for a balanced market," he noted.
With OPEC potentially announcing a move when it meets at the end of November, it is widely expected that OPEC and Russia will extend the deal even though the deal is currently due to last until March 2018.
The IEA agreed, saying that "the next few weeks ahead of the producers' meeting in Vienna on November 30 will be crucial in shaping their decision on output. A lot has been achieved towards stabilizing the market, but to build on this success in 2018 will require continued discipline."
With West Texas Intermediate is fetching $50.97 a barrel and West Texas Intermediate is fetching $50.97 a barrel West Texas Intermediate is fetching $50.97 a barrel, crude oil prices are still a long-way off previous levels even though prices have recovered from lows around the mid $20s seen in early 2016.
"Reflecting relatively weak July and August data and the impact of hurricanes in September," the IEA noted that the pace of growth had slowed into the third quarter following what it called "very strong year-on-year growth" in the second quarter of 2017.
(Source:www.cnbc.com)
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