Global oil supply 'will match demand until 2020'

  • Global oil supply 'will match demand until 2020'

Global oil supply 'will match demand until 2020'

Oil prices pulled back from session highs after the International Energy Agency on Monday upwardly revised US oil output growth, saying the country would be producing a total of almost 17 million barrels per day (bpd) in 2023.

Rising output from the USA alone will cover 80 per cent of the world's demand growth over the next two years, according to the IEA's five-year oil market forecast.

USA crude oil production has already risen past that of top exporter Saudi Arabia, to 10.28 million barrels per day (bpd). According to the agency, further growth is possible in the next few years if restrictions envisaged by the agreement are lifted and new projects are launched. The IEA said USA oil will account for 60% of the 6.4 million new barrels produced daily between now and 2023. That would take US liquids output to a total of 17 million barrels a day.

OPEC Secretary General Mohammad Barkindo and other OPEC officials are expected to hold a dinner on Monday with USA shale firms on the sidelines of the conference.

Increases in USA production alone will cover 80 percent of the world's demand growth in the next three years - with Canada, Brazil and Norway covering the rest, the report said. Still, Canadian producers should be able to increase shipments to USA refineries, assuming completion of new pipeline projects like TransCanada Corp.'s Keystone XL and Enbridge Inc.'s Line 3.

U.S. West Texas Intermediate (WTI) crude CLc1 was virtually flat at $61.23 per barrel.

In its report, the IEA warned that Canadian oil pipeline constraints are part of a wider capacity crisis brewing across North America.

But the report finds that despite falling costs, additional investment will be needed to spur supply growth after 2020.

"With limited additional demand for these volumes in the domestic refining system, future US production will need to clear into export markets", Wood Mackenzie's chief economist Ed Rawle said in a release Monday. As a result of new investments in pipelines and other infrastructure that ease the current bottlenecks, United States crude export capacity reaches almost 5 mb/d by 2020 and Corpus Christi solidifies its position as the primary North American crude-oil outlet. "If sufficient capacity is not built, the increase in production we foresee could be at risk, with serious implications for global markets".

Worldwide benchmark Brent crude LCOc1 was down 21 cents, having shelved morning gains of around 0.6 percent, at $64.16 a barrel by 1319 GMT.