Balanced oil markets in 2018 if OPEC producers hold their nerve – IEA

LONDON (ICIS)–The Paris-headquartered International Energy Agency (IEA) sees roughly balanced oil markets next year if OPEC production remains unchanged and weather conditions remain normal, it said on Thursday.

It is looking to a stock build of 800,000 bbl/day in the first quarter of 2018.

“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 said in its latest monthly Oil Market Report.

“Leading oil producers will have looked at their market balances and probably drawn the same conclusion,” it added.

Crude oil demand growth slowed to 1.2m bbl/day in the third quarter of 2017, from stronger growth of 2.2m bbl/day in Q2, reflecting weak August data and the impact of hurricanes in September.

The agency’s forecast for global demand growth is unchanged at 1.6m bbl/day in 2017, representing year on year demand growth of 1.6%. Global crude oil demand growth in 2018 is forecast at 1.4m bbl/day (1.4%).

Non-OPEC supplies edged higher in September but the growth of supply from these sources is expected to more than couple next year compared with 2017 to 1.5m bbl/day from 700,000m bbl/day (the growth forecast for 2017). OPEC crude oil supply was virtually unchanged in September.

There is likely to have been a draw down in global crude oil stocks in September, the IEA said, with reduction in floating storage and in the OECD nations outweighing net builds in China.

OPEC producers meet in Vienna on 30 November and the IEA said the next few weeks swill be crucial in shaping their decisions on output.

Pictured above: Crude oil being unloaded in Zhoushan city, east China’s Zhejiang province
Source: Imaginechina/REX/Shutterstock