Global oil inventory to decline by 0.1mbpd in 2017
The United State Energy Information Administration (EIA) expects global liquid fuels inventories to decline by an average of 0.1 million barrels per day (bpd) in 2017, and to increase by an average of 0.2 million bpd in 2018.
The agency, in its monthly oil market report, also expects global oil markets to be in closer balance during the next 18 months. It said unplanned oil production outages in Nigeria decreased in June, as Forcados crude oil resumed production following nearly six months offline.
EIA noted that Forcados production is typically about 0.2 million bpd, and although cargoes have begun loading Forcados crude, and estimates that roughly half of its volume production would have resumed in June, while full production will occur sometime in the last quarter.
The agency said average OPEC surplus crude oil production capacity is expected to be 2.1 million bpd in 2017, and 1.4 million bpd in 2018, as surplus capacity is typically an indicator of market conditions, and surplus capacity below 2.5 million bpd indicates a relatively tight oil market. “However, high current and forecast levels of global oil inventories make the forecast low surplus capacity less significant,” it added.
EIA said global consumption of petroleum and other liquid fuels averaged 96.9 million bpd in 2016, an increase of 1.5 million bpd above 2015 level.
It added that consumption growth would be 1.5 million bpd in 2017, and 1.6 million bpd in 2018, with 1.2 million bpd of the growth in both years coming from countries outside of the Organisation for Economic Cooperation and Development (OECD).
Forecast growth in the consumption of hydrocarbon gas liquids (HGL) is an important driver of overall growth in global liquid fuels consumption.
EIA estimates that “petroleum and other liquid fuels production in countries outside of the Organisation of the Petroleum Exporting Countries (OPEC) decreased by 0.6 million bpd in 2016, with more than half of the decrease occurring in North America.”
However, EIA expects non-OPEC production to rise by 1.0 million bpd in 2017, and by 1.2 million bpd in 2018, as total U.S. liquid fuels production increases by 0.8 million bpd and by 1.0 million bpd respectively, in response to rising oil prices, and increases in drilling productivity.
OPEC Secretary-General, Mohammed Barkindo, said rebalancing of the oil market is progressing more slowly than expected, but will speed up in the second half of the year.