Crude oil prices have stabilized at the end of last week, despite persistent concerns over global supply availability, as well as frequent reports of growing supplies from the United States and others. This is hampering the efforts of OPEC and some producers outside of the organization to reduce the gap between supply and demand in the market. US WTI rose by 5 cents, or 1.65 percent, to $62.26 a barrel, after rising 23 cents on Thursday, while global benchmark Brent crude rose 6 cents to $66.03 a barrel.
Reports released last week prompted investors to re-focus on the possibility that oversupply could overshadow the expected rise in demand for crude in 2018. In the IEA monthly report, demand for crude grew by 1.5 million barrels per day to 99.3 million barrels In 2018. The report claimed that the January inventory increase of 18 million barrels above the level of December close to half the size of the increase seen in this time of year. In an attempt to reduce global supply, the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, are implementing an agreement to cut output by about 1.8 million bpd from January 2017 until the end of 2018.
Assuming no change in OPEC production for the rest of the year, the IEA expects a slight increase in OECD stocks in the first quarter of this year with declines thereafter, with non-OPEC supply growing by 1.8 million bpd in 2018 to 97.9 million bpd, led by the United States, which is expected to increase its crude production by 1.3 million barrels per day in 2018, to more than 11 million barrels per day by the end of the year.
OPEC’s crude production in February fell to 32.1 million barrels per day (bpd), led by Venezuela and the United Arab Emirates. The agency raised its demand for OPEC crude oil to 32.4 million bpd for 2018 compared to 32.3 million bpd last month. US production, which has reached 10.41 million barrels per day, still raises concerns among international organizations that the supply will push up the increase, negatively affecting the OPEC deal to cut output.
Oil producers in the United States have benefited from the recovery of crude prices over the past months, supporting new exploration and exploration. US oil data showed oil production in the United States recorded 10.381 million barrels per day in the week ending March 9, compared with 10.369 million barrels a day recorded in the previous week. Oil inventories in the United States jumped by 5 million barrels in the same period against expectations of 2.2 million barrels, while gasoline stocks fell by about 6.3 million barrels.
OPEC has raised its estimate of overseas supply growth this year as a result of US production, and has expected increased demand for crude. OPEC’s monthly report said non-OPEC supply would rise by 1.66 million bpd this year, to 59.53 million bpd.
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