Global oil supply rose in November at the fastest rate in a year amid a surge in U.S. shale production, possibly complicating OPEC’s efforts to restrain output.
The International Energy Agency said global supply rose 200,000 barrels per day to 97.8 million bpd last month while OPEC production fell for the fourth consecutive month to 32.36 million bpd, down 1.3 million bpd on a year ago.
Data from the U.S. Energy Information Administration show that for September, U.S. crude oil output increased month-on-month by 290,000 per day to reach 9.48 million bpd, the highest monthly average since April 2015 and 928 kb/d above a year ago. Preliminary weekly data suggests that U.S. production increased further into early December.
“Recently, U.S. drilling activity and well completion rates have picked up again, suggesting higher production to come in a few months,” the IEA said. “Consequently, we have raised our annual growth forecast for total U.S. crude oil to 390,000 bpd this year and 870,000 bpd for 2018.”
OPEC’s efforts to curb output has helped to raise oil prices above $60 a barrel. The organization — with the support of 10 non-OPEC producers led by Russia — agreed last month to extend their production cuts until the end of 2018.
But the IEA warned that “when our U.S. outlook is added to expectations for the other producers, output from non-OPEC countries could rise by 1.6 million per day in 2018, an increase of 200,000 bpd to our [previous] forecast.”
In the first half of 2018, the agency said, the oil surplus could be 200,000 per day before reverting to a deficit of about 200,000 per day in the second half, leaving 2018 as a whole showing a closely balanced market.
“A lot could change in the next few months but it looks as if the producers’ hopes for a happy New Year with de-stocking continuing into 2018 at the same 500,000 bpd pace we have seen in 2017 may not be fulfilled,” the IEA concluded.