Prediction of spiking USA output caps oil's gains

Prediction of spiking USA output caps oil's gains

New global petrochemicals capacity will account for 25% of oil-demand growth by 2023.

"The United States is set to put its stamp on global oil markets for the next five years", said Fatih Birol, the IEA's executive director.

In 2017, the ICA made a forecast that shale production in the USA would grow at the rate of 1.4 million barrels per day by 2022, with prices of oil being as high as $60 per barrel and up by over 3 million daily with prices of as much as $80 per barre.

Oil prices edged higher towards $65 a barrel on Monday but predictions of a major spike in United States oil output in the next five years capped the market's gains.

Oil 2018 also examines a variety of other topics including crude quality issues arising from the rapid increase in US production, changing trade flows and a growing global refining capacity surplus. If not enough is spent on exploration, that could lead to future shortages and price spikes.

As a result, by 2023 the level of spare production capacity that could be used in the event of a disruption will be the lowest since 2007. As a result of new investments in pipelines and other infrastructure that ease the current bottlenecks, US crude export capacity reaches almost 5 MMbpd by 2020 and Corpus Christi solidifies its position as the primary North American crude-oil outlet. Prices are less than half that today.

Global oil demand will increase by a total of 6.9 million barrels a day to reach 104.7 million a day by 2023, with China remaining the "main engine of demand growth". That would take US liquids output to a total of 17 million barrels a day. Output there is expected to double by 2023.

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The IEA's outlook looks ahead five years and identified the United States, Brazil, Canada and Norway as the four countries that will be able to meet the demand for oil.

Industry sentiment is indeed improving along with rising prices, but major oil companies are reluctant to invest vastly higher sums.

In another ominous sign for OPEC, the IEA report noted that production from mature oil fields around the world isn't declining as fast as before, as lower costs help producers operate more efficiently. The rebound, however, also spurred more drilling in the USA, where operators found success in shale formations stretching from Texas to North Dakota to the Northeast.

IEA Executive Director Fatih Birol made the remarks to reporters at the CERAWeek by IHS Markit that kicked off on Monday in Houston in the USA state of Texas.

OPEC, the Organization of the Petroleum Exporting Countries, will increase capacity only modestly through 2023 because of sharply falling production in Venezuela, according to the energy agency forecast.

In energy ETFs, the United States Oil Fund ( USO ) was down 0.3% at $12.32 while the United States Natural Gas ETF ( UNG ) was down 0.9% at $22.36.

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