Oil prices hold steady on competitive data, North Sea outage

Some have said this week’s 'perfect storm' of problems will raise questions about the UK’s energy security
Credit
Yui Mok  PA

Some have said this week’s 'perfect storm' of problems will raise questions about the UK’s energy security Credit Yui Mok PA

The IEA left its forecast for global oil demand growth unchanged for 2017 at 1.5 million bpd, marking a rise of 1.6 percent, and for 2018, at 1.3 million bpd, equal to an increase of 1.3 percent.

Oil traders also eyed the upbeat global economic conditions.

"Global energy and oil demand will grow in the long term", and added that "the end of this brutal oil cycle is finally in sight".

However, signs of increasing supply has put pressure on the market.

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The IEA delivered its report on Thursday and says it expects non-OPEC supply to grow by 1.6 million barrels a day in 2018.

An early morning rally Tuesday was spoiled, meanwhile, by an estimate from the U.S. Energy Information Administration that total U.S. oil production next year could set a record at 10 million barrels per day.

The IEA pointed out that inventories in developed nations have fallen to their lowest level since July 2015; but in noting that us crude output next year would climb by 870,000 barrels per day (bpd), up from its November forecast of 790,000 bpd, the agency stated, "On our current outlook, 2018 may not necessarily be a happy New Year for those who would like to see a tighter market; total supply growth could exceed demand growth".

Many analysts remain uncertainty about the volume of shale to come in 2018, but the general consensus is that it will be higher.

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Britain's biggest pipeline from its North Sea oil and gas fields is likely to be shut for several weeks for repairs. The Forties pipeline, recently purchased from BP by Ineos, is one of the most important pipelines in the North Sea.

Force majeure is a legal designation that suspends a firm's contractual obligations due to situations beyond its control. The group of producers agreed last month to extend curbs through the end of next year, yet concerns linger over whether compliance will remain strong for another 12 months at a time when drillers in the USA are pumping out crude in a higher price environment.

According to data compiled by Bloomberg, the Forties shutdown will remove an additional 5.5 million to 13 million barrels from the market by the time the pipeline is restarted. As forecasters and analysts disagree on the pace and the volume of American production, all indications point to an increase in supply.

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