Back in mid-February, Paris-based IEA raised its forecast for oil demand growth in 2018 to 1.4 million barrels per day, from a previous projection of 1.3 million bpd, despite OPEC saying their supply cuts would continue.
Today’s announcement marks the fourth consecutive month that OPEC has had to raise its expectations for supply growth from the U.S. and other producers. This suggests the efforts by OPEC and Russia to clear the global oil glut by cutting supplies are not working as well as they expected.
Increased production by U.S. petroleum companies didn’t happen overnight. As the IEA noted in February, “In just three months to November, (U.S.) crude output increased by a colossal 846,000 bpd and will soon overtake that of Saudi Arabia. By the end of this year, it might also overtake Russia to become the global leader.”
And the American shale industry is continuing to push oil output to record levels. While global oil demand is expected to reach 1.6 million barrels a day this year, more than previously projected, this can be covered by the 1.66 million barrels a day from sources outside OPEC.
The OPEC report raised the non-OPEC supply growth forecast by 260,000 barrels a day in the latest edition, and that from the U.S. by about 12 percent to 1.46 million a day. This means the oil cartel will have to cut about 200,000 barrels a day from its supply. In February, the IEA estimated non-OPEC growth in 2018 to be 1.8 million barrels a day.
And even with the OPEC report showing a 12 percent increase in oil production in the U.S., the U.S. Energy Information Administration said in its monthly drilling report on Tuesday that total American output has passed 10 million bpd, beating a record set in 1970.
