Crude oil prices trim gains on IEA report

Mar 06, 2018, 01:17

Analysts also said prices were propped up by "bullish comments" from ministers from the Organization of the Petroleum Exporting Countries and other global industry players at the CERAWeek conference in Houston, the largest energy conference, on Monday.

The energy group forecasts that the USA will supply enough oil to meet 80 percent of the growing demand over the next three years, and Canada, Brazil and Norway will meet the rest.

Oil demand will keep expanding over the next five years, and the United States will fulfill most of the world's growing appetite, the International Energy Agency said on Monday.

The deal struck between the members of OPEC and 11 partners, including Russian Federation, to cut 1.8 million barrels per day of crude oil production has had its intended effect of drawing down global stockpiles and lifting prices.

Oil prices rose Monday, supported by reports of supply disruptions in Libya over the weekend.

OPEC and other major producers agreed to cut combined output by about 1.8 million bpd to drain a global oil glut. The contract was well below this year's highs of over $71 per barrel that it hit in January.

"As Canadian shipments to the US grow, this frees up lighter USA crude for export, particularly to meet Asian demand for petrochemical feedstock", the IEA said.

The IEA, which advises industrialized nations on energy policies, also said it expected oil demand growth to average a fairly robust 1.1 percent a year to 2023 and said OPEC would fail to significantly increase its production capacity.

As a result, Canada will actually be the third largest source of non-OPEC oil supply growth in the next five years after the USA and Brazil. That would take USA liquids output to a total of 17 million barrels a day.

Ecuador's Perez also downplayed the impact of US shale production on global crude markets, noting that shale fields tend to have lower total oil recovery than conventional fields.

She cautioned however that part of the reason Canada's oil supply growth wasn't expected to be larger is due to delays for export pipelines like TransCanada Corp.'s Keystone XL and Kinder Morgan Canada's Trans Mountain expansion project.

However, American production from known shale-oil reserves is soaring.

The Paris-based agency saw little to no increase in spending on exploration outside the USA in 2017 and 2018, and warned that additional investment will be needed to spur supply growth after 2020. It expects US crude product to exceed 11 million barrels a day by 2023, a figure that does not include NGLs and condensates. "If sufficient capacity is not built, the increase in production we foresee could be at risk, with serious implications for global markets".

Crude futures +0.9% to $61.80/bbl.

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