Oil is set to rise this week, 2017 demand is seen growing more than previously expected, and USA stockpiles are declining, yet prices are still only about $1 higher than when OPEC pledged to curb output late a year ago. The IEA revised up its overall 2017 demand growth figure to 1.4 mb/d, an increase of 0.1 mb/d compared to last month.
But the EIA still sees United States production still hitting a record in 2018 of 9.90 million barrels a day, down from the previous June forecast of 10.01 million barrels a day.
Oil prices slid in morning trading today after recent data showed ramped up production from members of the Organisation of the Petroleum Exporting Countries (Opec).
Oil market investors are losing confidence over OPEC's effort to offset the glut of supplies, though the impact could be hitting USA producers, the IEA said.
Rising U.S. shale production is also putting pressure on the OPEC agreement.
The cuts also drove up Middle East crude prices, prompting price-sensitive Indian buyers to seek substitutes from Russian Federation and Latin America as the world remains awash with oil. US crude inventories have slid the most since September over the past two weeks, but the IEA said there's little evidence that bloated global stockpiles are shrinking as anticipated.
There is a growing view that even though USA output could hit 10 million barrels a day by 2018, room for growth is limited and production will soon peak, said Li Li, the head of research at ICIS China.
"Estimates of global oil product demand growth in 2017 have been revised up.to 1.4 million barrels per day, on surprisingly robust preliminary second quarter demand numbers", the IEA wrote in its latest monthly oil market report. Prices are up 3.7 percent this week.
Similarly, the US EIA has also cut its WTI forecast for 2017 from $50.78 per barrel to $48.95 per barrel and for 2018 from $53.61 per barrel to $49.58 per barrel. According to the Libyan National Oil Corp., officials from Statoil were told of the "improvement of security situation in the production areas and NOC plans to return production to its normal levels". DUC is shorthand for drilled, but uncompleted wells.
The Senior Analyst at Interfax Energy's Global Gas Analytics Abhishek Kumar said in London: "U.S. gasoline demand remains lackluster and gasoline stocks are still above the five-yea average, which will cap gains in crude and gasoline prices". They now see Brent around $US55 a barrel in 2020, down from their previous forecast of $US82, as the market fully comes to terms with the new era of shale oil. OPEC reported June production at 852,000 barrels per day.