The Monthly Oil Market Report for March also showed non-OPEC oil supply for 2018 is revised 280,000 bpd higher from the month's prior forecast, representing year-on-year growth of 1.66 million bpd to 59.53 million bpd total supply.
Opec cut its forecast for demand for its own crude in 2018 by 250,000 bpd to 32.61 million bpd, marking the fourth consecutive decline.
Although OPEC in the report slightly raised its estimate of growth in world demand to 1.6 million bpd, it now projects the expansion in supply outside the group will exceed gains in demand.
"The negative aspect, and we continue to see this month-over-month, is everybody continues to revise their United States supply forecasts higher", said Nick Holmes, a director and investment analyst at Tortoise Capital in Leawood, Kansas. Gasoline stocks fell 6.27 million barrels to 244.8 million, the Energy Information Administration (EIA) report showed. In even the most pessimistic case, tight oil grows by another million barrels per day (BPD) from 2017 levels by about 2022.
But for other oil exporters around the world, including fellow members of OPEC, the crisis in Venezuela's oil sector might be good news as they could produce more without leading to a drop in prices. Although US production was lower than expected in December, there is no change to our overall 2017 number neither to our outlook for 2018 that expects crude output there to grow by 1.3 mb/d. Oil Price reports in its article Chinese Oil Production Hits Record Low that in the first two months of 2018, China's crude oil production dropped by 1.9 percent from the same period previous year to average 3.76 million barrels per day, according to Reuters calculations of data by China's National Bureau of Statistics.
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Indeed, the recognition that US shale is going to grow more than expected likely means that OPEC realizes it will need to keep the cuts in place longer than it had planned. Crude production rose by 12,000 barrels to 10.381 million barrels of oil a day. The move could have implications for U.S. sanctions on Iran, which could impact the latter's oil industry and exports, Facts Global Energy and Royal Bank of Canada warned. A broader market slump initially drove prices lower, while surging American production and increasing inventories remain a challenge. Oil had rallied to a three-year high in January.
Oil markets will enter the second quarter of 2018 with only a 75 million barrel surplus of refined products, down from 320 million barrels at the start of 2016.
Global oil demand rose by 1.6 million barrels per day past year.
And the U.S. shale oil industry is largely to blame with the group estimating that United States oil supply will lift 10.2% this year, accounting for almost 90% of total non-OPEC supply growth.
"This U.S. shale engine is not expected to run out of steam anytime soon, " said Stephen Brennock, analyst at brokerage PVM.