Production of crude oil from the Organization of Petroleum Exporting Countries averaged 32.5 million b/d in 2017, a 200,000-b/d decrease from 2016 levels, and OPEC oil production will average 32.7 million b/d in 2018, according to the US Energy Information Administration’s latest Short-Term Energy Outlook. Despite the extension of the production-cut agreement to yearend 2018 by OPEC and non-OPEC producers, EIA forecasts higher output from non-OPEC countries to contribute to growth in total liquid fuels supply in 2018. The non-OPEC outlook is 100,000 b/d higher than EIA’s November STEO, averaging 60.3 million b/d in 2018, which would be 1.7 million b/d higher than 2017 levels.
EIA expects that crude oil price increases in late 2017 will contribute to US crude oil production rising to more than 10 million b/d by mid-2018. Overall, US crude oil production is forecast to increase by an average of 800,000 b/d in 2018. Canada, Brazil, Norway, the UK, and Kazakhstan are forecast to add a combined 700,000 b/d of liquids production in 2018. This growth, together with the forecast 200,000 b/d growth in OPEC crude oil production and another 100,000 b/d increase in OPEC non-crude liquids production, results in forecast total global liquids production growth of 2.1 million b/d in 2018.
Liquids fuels demand
Despite higher oil prices, EIA expects global liquid fuels demand to increase by more than 1.6 million b/d in 2018, up from growth of 1.4 million b/d in 2017. Demand growth is not forecast to keep pace with supply growth, however, resulting in global liquids inventories increasing modestly in 2018. With global inventories expected to increase in 2018, EIA forecasts Brent crude oil prices will decline from current levels to an average of $57/bbl in 2018, which is $2/bbl higher than forecast in the November STEO. EIA forecasts Brent spot prices to average $54/bbl in 2017.