The global oil market is expected to show a surplus in the first half of 2018 due to growing US shale production, a new report suggests.
"On our current outlook, 2018 may not necessarily be a happy new year for those who would like to see a tighter market," the International Energy Agency (IEA) said in its monthly market update.
It said total supply growth could outstrip demand growth. "Indeed, in the first half the surplus could be 200,000 barrels per day (bpd) before reverting to a deficit of about 200,000 bpd in the second half, leaving 2018 as a whole showing a closely balanced market."
"A lot could change in the next few months but it looks as if the producers' hopes for a happy new year with de-stocking continuing into 2018 at the same 500,000 bpd pace we have seen in 2017 may not be fulfilled."
Brent crude oil futures, which recently hit a two-year high of more than $65 a barrel on the closure of the major North Sea Forties pipeline, had fallen 0.5 per cent this afternoon to $62.10 a barrel.
The IEA held its 2017 forecast for global demand growth at 1.5m bpd, equal to a rise of 1.6 per cent, and its 2018 forecast at 1.3m bpd, or a rise of 1.3 per cent.
Global oil supply rose 200,000 bpd in November to 97.8m bpd, the highest in a year, driven by rising US production. The IEA said supply from outside the Organisation of the Petroleum Exporting Countries (Opec) is set to rise by 600,000 bpd in 2017 and 1.6m bpd next year.
"Recently, US drilling activity and well completion rates have picked up again, suggesting higher production to come in a few months.
"Consequently, we have raised our annual growth forecast for total US crude oil to 390,000 bpd this year and 870,000 bpd for 2018."
An Opec-led coalition agreed to extend output cuts through to the end of 2018 as the group works to reduce the global supply glut and prop up prices, but rising US production has hampered its efforts.
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