Published: Fri, March 09, 2018
Entertaiment | By Minnie Bishop

'Crunch is looming' for oil supplies

'Crunch is looming' for oil supplies

For example, Russia's Energy Ministry reported this week that January 2018 oil production is down 1.4% from this time past year, and exports are down 2.1% in the same period. Output hit a record 10.057 million bpd in November, according to the US Energy Department.

Economic growth in Asia will propel demand for oil to 104.7 mb/d by 2023, an increase of 6.9 mb/d.

However, while the United States will stop being the world's largest oil-guzzler, it will take over as one of the largest players on the supply side.

The International Energy Agency (IEA) on Mar.05 forecast the us would become the world's top crude producer by 2023 with production hitting a record of 12.1 million barrels a day.

While the US Energy Information Administration sees worldwide supplies accelerating this year and the next, with estimates for demand growth shrinking, Saudi Aramco Chief Executive Officer Amin Nasser said he isn't losing any sleep over peak oil demand. "Without large-scale capital investment, the US domestic market can only absorb about a quarter of the additional four million b/d of USA crude expected to enter markets [by] 2023, leaving the rest for exports", Wood Mackenzie said. With forecast capacity of 36.3 million bpd, Opec will be supplying less than 35 per cent of global demand by 2023 compared to its historic share around 40 per cent.

He added: "We follow us oil production really closely".

For more than a year, OPEC and other producers including Russian Federation have limited production, a strategy that helped boost crude prices.

Which brings me back to the IEA.

OPEC supply to grow by only 750,000 b/d in next five years.

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Earlier, Ecuador's oil minister Carlos Enrique Perez Garcia told TASS on the sidelines of the CERAWeek conference in Houston, that at least seven ministers from the countries that are members of the OPEC oil production cut deal will participate in the meeting with shale oil producers.

As for USA demand, the EIA believes it will grow this year by 470,000 bpd, compared to its previous forecast of 450,000 bpd, and for next year it will rise by 360,000 bpd versus a previous forecast of 350,000 bpd. Environmentally minded Chinese energy policies encourage the use of commercial vehicles that burn natural gas, and growth in gasoline demand is expected to slow. In 2017, USA crude production averaged 9.3 million barrels a day for the entire year.

They have scheduled dinners with shale executives and financiers for the second time in two years, underscoring the maturation of a relationship between big petrostates and a once-upstart industry that weathered OPEC's best efforts to bury it under a supply glut from 2014 to 2016.

West Texas Intermediate (WTI) crude oil prices are forecast to rise from an average of $50.79 a barrel in 2017 to $58.17 this year before moderating to $57.51 in 2019.

"But as we've highlighted repeatedly, the weak global investment picture remains a source of concern - more investments will be needed to make up for declining oil fields".

The shift represents a major challenge to the oil industry, as numerous petrochemicals will be produced using gas, cutting out refineries.

"People are waiting to see: Will storage volumes point toward a tighter fundamental outlook?" said Gene McGillian, a market research manager at Tradition Energy in Stamford, Connecticut.

"The generalized market anxiety over what could end up being a global trade war is dragging everything down", said John Kilduff, partner at investment manager Again Capital in NY.

Global oil industry players are also concerned about threats from renewable energy technologies and rapid changes to the automobile industry.

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