OPEC Reports Oil Demand Rose in 2017

Al Mazrouei said, “all of those give the right signals to market and we have seen the market giving us back right signals in terms of reducing inventories, in terms of approaching market recovery and we are in good shape, I’m optimistic the rest of the year will be good as well”. “The sell side is assuming an average oil price of $55/bbl for 2018”, the bank’s analysts said in a January 15 note.

Oil prices have been on the rise since the middle of past year.

In this context, the fact that Venezuela itself says that its production declined by such an enormous number is notable.

Most analysts expect US output to break through 10 million barrels per day soon. For example, oil prices received a boost in October/November driven by market concerns over US-Iran tensions and the Kurdistan war in the Middle East. To offset the American bonanza, OPEC and Russian Federation assembled a coalition of 24 nations that would cut their own production. There aren’t other examples of such a massive erosion of oil production in such a short period of time.

“The market continues to take support from signs that OPEC and Russia’s compliance with their production cuts is really high and it doesn’t seem that there are any worries that there is cheating going on yet”, Gene McGillian, a market research manager at Tradition Energy in Stamford, Conn., said by telephone. Rystad Energy also estimated that total global recoverable oil reserves were about 2.1 trillion barrels, about 70 times the current production rate and far in excess of cumulative production up to 2015 of 1.3 trillion barrels. At the current level of inventories, it will take some time for the United States shale producers to flood the markets and create a similar oil glut in the coming quarters.

OPEC, Russia and Saudi joined forces in late 2016 against the threat posed by a boom in USA shale oil, which had flooded markets and sent prices crashing, and assembled a coalition of 24 nations that would cut their own production.

U.S. crude inventories fell 6.9 million barrels last week, compared with forecasts for a 3.5 million-barrel draw, the U.S. Energy Information Administration said.

OPEC supply cuts were driven in part by a production collapse in crisis-hit Venezuela, which communicated a year-on-year production fall of around 13% in 2017, representing the world’s largest unplanned drop in production for the year.

The International Energy Agency (IEA), in its monthly report, said that global oil stocks have tightened substantially, aided by OPEC cuts, demand growth and Venezuelan production hitting near 30-year lows.

United States oil exports, which acquired market share during the course of 2016 and 2017, have been outweighing output cuts by OPEC and its allies over the past year.

“India is the most impacted country in G-20 due to rise in crude oil prices”.

On the first point – no one can predict the future, but oil price forecasts tend to be even more hilarious than most. However, the rising USA output continues to be a crucial factor in the determination of oil prices.

Mr Atkinson revealed the IEA is expecting a “wave of new production” in the coming months. Over the course of 2017, Venezuela’s oil production fell by 649,000 bpd, a loss of 29 percent.

The forecast means that USA demand from the global energy market would be reduced much earlier than anticipated, which would have a huge knock-on effect across the world.

Both contracts climbed to their highest levels since December 2014 this week with Brent reaching $70.37 on Monday and WTI up to $64.89 on Tuesday. 2025 might also indicate the peak of oil demand, provided that the forecasts are accurate.