OPEC and shale Producers are interested in further dialogue - OPEC Secretary General

The United States will dominate the global oil markets in the coming years and 80% of global demand growth will come from there by 2020, as the shale boom keeps OPEC under pressure, shows report of the International Energy Agency. They say that USA production will grow by 3.7m barrels per day (bpd) during the next five years.

Economic growth in Asia and a resurgent US petrochemicals industry should lead to a 6.9 million b/d increase in oil demand by 2023 to 104.7 million b/d, according to the IEA.

The new wave is underpinned by higher oil prices following the pact between OPEC producers and a group of non-OPEC countries to collectively curb output through this year.

The US West Texas Intermediate crude April contract climbed 51 cents, or about 0.83 percent, at $61.76 per barrel.

The market has recovered mostly since the OPEC cartel partnered with Russian Federation and other producer nations to cut output in 2017.

The OPEC and non-OPEC production cut that began at the beginning of a year ago has worked in the cartel's favor.

"At current prices, the market is incentivizing USA shale companies to produce more", said David Garza, a veteran oil executive who runs the Houston office of energy trading house Gunvor Group Ltd. As specified in the IEA's Oil Market Report, the deterioration of the situation in Venezuela and the positive macro scenario could push the demand for crude oil.

At the same time, experts predict the global economy to accelerate its growth this and next year, which will definitely increase the global demand for crude oil.

“It's just a statement that everyone will work together to make sure the oil market is well-supplied and everyone is happy to be working together, ” he said.

Crude oil prices tested higher levels on Tuesday but settled almost unchanged after prices were unable to pierce through a downward sloping trend line.

However, while the USA will stop being the world's largest oil-guzzler, it will take over as one of the largest players on the supply side.

The resignation of Gary Cohn, economic adviser to U.S. President Donald Trump, who was seen as a bulwark against protectionist forces in the government, triggered a drop in Wall Street stocks and tempered investor risk appetite. "If you are a shale-oil producer, who brought you back?"

The organisation says over the next three years, gains from the United States alone will cover four-fifths of global demand growth for oil, with Canada, Brazil and Norway able to cover the remainder.

Sugandha Sachdeva, vice-president and in charge (metals, energy and currency research) at Religare Securities Ltd said, "Demand growth over 2018-2019 will be matched up by higher supply from the United States, which is rising at a fast pace and means prices will not budge significantly".

The EIA said on Tuesday it expects USA crude output in the fourth quarter of 2018 to reach an average of 11.17 million bpd, up from the previous forecast a month ago of 11.04 million bpd. It is also expected to rise by 2.7 million barrels per day to 12.1 million barrels per day by 2023. "It does appear as if we need more evidence that the rebalance continues to really ignite a rally again". This is mainly due to the strong recovery in production in the U.S., which reached 10.28 million barrels per day (its historic maximum). After it flooded the market in 2014, oil prices crashed, forcing shale producers to reshape themselves into fitter, leaner and faster versions that can thrive with oil at $50 a barrel.

Related news: