Oil prices retreated slightly on Tuesday, erasing gains made yesterday after fresh forecasts predicted that supply could surpass demand in 2018 despite OPEC’s best efforts to keep supply contained. The International Energy Agency in Paris forecast a demand growth of 1.4 million barrels per day in 2018, up from its last projection of 1.3 million barrels per day.
"U.S. producers are enjoying a second wave of growth so extraordinary that in 2018 their increase in liquids production could equal global demand growth," the IEA said in its closely-watched report published Tuesday.
"This is a sobering thought for other producers currently sitting on shut-in production capacity and facing a renewed challenge to their market share," CNBC quoted the organization as saying.
On Monday, OPEC announced its expectation that global demand would increase by 1.59 bpd in 2018, to 98.6 million bpd. Additional forecasts are expected from the American Petroleum Institute later on Tuesday and the U.S. Energy Information Administration on Wednesday. Though global inventories are now close to their five-year average thanks to OPEC’s production cutbacks, the increased production in the United States is threatening to send inventories higher.
On Tuesday, Iraqi oil minister Jabar al-Luaibi announced that there is no plan to cancel the production cuts agreed upon by OPEC and its non-member partners and that there is no plan to reopen the issue until December, at the earliest. He also noted that Iraq is in full compliance with OPEC’s plan.
U.S. WTI futures were down 0.10 percent as of 11:34 a.m. GMT on Tuesday, to $59.23 per barrel. Brent crude futures were modestly higher, up 0.18 percent to $62.70 per barrel.