The agency in its report reiterated what everyone either intimately or remotely acquainted with the energy industry knows already: that American oil production, which has already risen to its highest level in almost 50 years, will push past 10 million barrels per day (bpd) in 2018 thanks to higher prices encouraging more producers to start pumping.
Domestic crude inventories are on the decline, down more than 6 million barrels last week to stand at 412.65 million barrels.
"The continued draw-downs in crude inventories is indicative that the US market is more balanced today than it has been in several years", Matthew Beck, managing director of an $8 billion oil and natural gas portfolio at John Hancock Financial Services Inc.in Boston, said by telephone. In gasoline, the EIA reported another build, of 3.6 million barrels for the week to January 12.
U.S. West Texas Intermediate and international-benchmark Brent crude oil finished the week lower for the first time since the week-ending December 15.
"The US remains the key driver of non-Opec supply growth", as shale producers in the US ramp up production, Opec said. What's more, Morse noted, U.S. shale is not the only threat for OPEC's peace of mind: deepwater oil and Canadian oil sands can be just as risky at the right price level.
The next chart shows the change in days of US crude oil supply that have occurred over the last four months of each year going back to 2002.
Russia's oil and gas index may gain another 20 to 30% this year as investors have yet to price in Brent at $70/bbl, according to Sberbank CIB. If that happens, the price of gas and other oil-based products would soar.
The IEA then underlined that the United States energy market was going through radical upheaval, sparked by the development of new technologies, especially the extraction of shale gas through a controversial process called "fracking" that has been limited or banned in other countries.
But he said producers still had a lot of hard work ahead to restore the market to health, and it was unlikely to reach balance by the middle of this year.More news: Smith not sour over controversial dismissal
As producers react to the recent surge in Brent crude above $70 a barrel, the agency expects non-OPEC supply to expand by 1.7 million this year, the biggest jump since the peak of the shale boom.
It increased 0.72 percent, confirm OPEC statistics.
This will be the first meeting of the year under the chairmanship of Saudi Arabia's energy minister, Khalid Al Falih and the UAE energy Minister, Suhail Al Mazrouei in his capacity as OPEC President.
In fact, the US Energy Information Administration (EIA) expects the US output to grow at nearly 11% in 2018, and estimates the country to surpass Saudi Arabia and Russian Federation in oil production by 2019. At the current level of inventories, it will take some time for the USA shale producers to flood the markets and create a similar oil glut in the coming quarters.
In particular, producers in the U.S. have been amping up their output and will likely continue to do so, essentially wrecking the work OPEC has done to this point.
That sets 2018 up to be very good for oil prices.
However, besides the global growth, all other are short-term impacts. Both countries, though, have been keeping a check on their output in 2017 courtesy the output constraint arrangement between the OPEC and its non-OPEC allies.
Are you wondering why oil is off to such a rousing start in 2018? This stabilized the price and helped to growth of commodity markets.