The International Energy Agency made a statement this Tuesday saying that the increase in global oil production, led by the U.S., is going to outrun growth in demand in 2018.
This year, the IEA increased its predictions for oil demand growth from 1.3 million barrels per day to 1.4 million barrels per day. The IEA raised its forecast as a result of the International Monetary Fund also increasing its prediction of global economic prosperity for 2018 and 2019.
The IEA released a monthly market report where it stated that oil demand increased at a rate of 1.6 million barrels per day in the previous year.
The IEA made a statement in saying, “Today, having cut costs dramatically, U.S. producers are enjoying a second wave of growth so extraordinary that in 2018 their increase in liquids production could equal global demand growth”.
The U.S crude output rose by an astounding 846,000 barrels per day, and they might soon surpass that of Saudi Arabia. The U.S. might take over as the global leader if they continue to grow and exceed Russia too.
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By the end of 2018, it is possible that the U.S. crude output could spike to 11 million barrels per day.
The world’s most wealthy nations across the globe have taken a turn for the worst. Oil inventories decreased by 55.6 million barrels in December to 2.851 billion barrels. Since 2011, this had been the strongest one-month period drop.
“With the surplus having shrunk so dramatically, the success of the output agreement might be close to hand. This, however, is not necessarily the case: oil price rises have come to a halt and gone into reverse, and, according to our supply/demand balance, so might the decline in oil stocks, at least in the early part of this year.”
Given that global growth production remains strong, oil prices could be sustained even if U.S. production increases. In January, oil prices reached a high of $71 a barrel.