The folks ‘in the know’ are predicting at least a “modest” oversupply in global oil markets next year…
On June 6, 2017, the U.S. Energy Information Administration (“EIA”) released its Short-Term Energy Outlook – a full copy of the report can be found here.
Key Takeaways:
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Oil Prices: According to the Forecast Highlights, “EIA forecasts Brent spot prices to average $53/b in 2017 and $56/b in 2018. West Texas Intermediate (WTI) crude oil prices are forecast to average $2/b less than Brent prices in both 2017 and 2018.”
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OPEC Extension: OPEC announced an extension to voluntary production cuts through March 2018 (remember, they were supposed to end this month – June 2017).
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Natural Gas Expected to Increase: According to the Forecast Highlights, a 1.0 Bcf/d increase in U.S. dry natural gas production is predicted.
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Wind and Solar Electricity Generating Capacity Expected to Increase: According to the Forecast Highlights, wind energy generation capacity is expected to increase from 81 GW in 2016 to 88 GW by the end of 2017 to 102 by the end of 2018; similarly, solar capacity additions are expected to increase to 32 GW by the end of 2018.
Oil & Gas Journal published an article on June 6, 2017 discussing the EIA’s recent Short-Term Energy Outlook entitled, “EIA: Global oil oversupply could return in 2018.” Specifically, the Oil & Gas Journal article discusses oversupply issues and states as follows:
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“The US Energy Information Administration lowered its crude-oil price forecast and raised its US production outlook for 2018 in its latest Short-Term Energy Outlook. The lower price forecast reflects the possibility of a return to modest oversupply in global oil markets in 2018.”
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“The expectation of supply growth in 2018 could contribute to oil-price weakness in late 2017 and early 2018.”
Only time will tell! We all know how difficult it is to predict prices, supply and demand…
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