Nogami: OPEC, led by Saudi Arabia, and non-OPEC oil-producers such as Russian Federation have agreed to extend the current cut in oil output for nine months. "OPEC is being exemplary citizens here, keeping supply under wraps".
On the other hand, higher crude prices will increase price of natural gas which in turn will increase input cost for fertiliser and petrochemical companies that use fertilisers as a feedstock and increase the price of city gas distributors and power companies.
The U.S. Energy Department expects production will blow through 10 million bpd in the next few months, en route to 11 million bpd by next year, rivaling Russian Federation and Saudi Arabia.Futures contracts show an expectation for prices to pull back by year end, with the December U.S. crude futures contract now trading just above $60 a barrel.
However, U.S. production dropped sharply, though those figures are not considered as reliable as monthly data, which is released with a lag.
Mazrouei also stated he was not anxious about a supply shock due to the crude output declines in Venezuela and political unrest in Iran. EIA expects global inventories to increase by about 0.2 million b/d in 2018 and by about 0.3 million b/d in 2019.
Q: How are OPEC's presence in the crude oil market and the recent trends in shale oil being interpreted?
The U.S. oil rig count, an early indicator of future output, rose more than 40 percent a year ago, according to Baker Hughes data.
Distillate fuel product supplied averaged about 3.9 million barrels per day over the last four weeks, up by 6.8 percent from the same period past year.
However, the latest supply forecasts by Energy Information Administration (EIA) suggests that such euphoria in the oil market could be a short-lived one.
This comes as stocks in the region have increased seven of the last eight weeks by almost 5.8 million barrels to 58.21 million barrels. It is even possible that continued growth in output will lead to OPEC's controls becoming ineffective and result in prices falling to the $40 level a barrel. So despite these builds, USAC gasoline inventories remain about 1% below the five-year average, the same as back in early November. Output shrank the most since October. Since mid-July, Saudi, the largest producer pledged to lower crude oil exports. Likewise, there is the possibility of shale oil becoming increasingly hard and costly to extract.
OPEC's aim is to ensure the stabilisation of oil markets.
Q: What will become of global crude oil supply and demand in the mid- to long-term? This is happening against the backdrop of an increase in world oil demand forecast in 2018 by 100,000 barrels per day. That is equivalent to what Saudi Arabia and Russian Federation produces.