U.S. oil production growth combined with a slowing global economy will put oil prices under downward pressure in 2019, challenging OPEC’s resolve to support the market with output cuts, the International Energy Agency said on Jan. 18.
The IEA, which coordinates the energy policies of industrial nations, said it was keeping its estimate of oil demand growth for this year unchanged at 1.4 million barrels per day (MMbbl/d), close to 2018 levels.
“The impact of higher oil prices in 2018 is fading, which will help offset lower economic growth,” the Paris-based IEA said in its monthly report.
Oil rallied above $85 per barrel in the second half of 2018 on concern about lower supplies from Iran due to new U.S. sanctions.
But crude fell towards $50 at the end of 2018 due to an economic slowdown and rising U.S. supply, prompting producer group OPEC to cut output in an effort to keep prices above $60.
The IEA said global oil supply last month fell by 950,000 bbl/d, roughly 1%, led by lower OPEC output even before the organization’s new supply-cutting pact took effect in January.
The IEA said non-OPEC production growth was set to slow to 1.6 MMbbl/d in 2019 after record annual gains of 2.6 MMbbl/d in 2018.
However, the U.S. will continue to surprise on the upside.
“The United States, already the biggest liquids supplier, will reinforce its leadership as the world’s number one crude producer. By the middle of the year, U.S. crude output will probably be more than the capacity of either Saudi Arabia or Russia,” the IEA said.
Recommended Reading
Help Wanted (Badly): Attracting Workers to Energy is Becoming Difficult
2024-03-27 - Attracting workers to the energy industry is becoming a difficult job, despite forecasted growth in the industry.
Stena Evolution Upgrade Planned for Sparta Ops
2024-03-27 - The seventh-gen drillship will be upgraded with a 20,000-psi equipment package starting in 2026.
Petrobras to Step Up Exploration with $7.5B in Capex, CEO Says
2024-03-26 - Petrobras CEO Jean Paul Prates said the company is considering exploration opportunities from the Equatorial margin of South America to West Africa.
E&P Highlights: March 25, 2024
2024-03-25 - Here’s a roundup of the latest E&P headlines, including a FEED planned for Venus and new contract awards.
TotalEnergies Restarts Gas Production at Tyra Hub in Danish North Sea
2024-03-22 - TotalEnergies said the Tyra hub will produce 5.7 MMcm of gas and 22,000 bbl/d of condensate.