NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures retreated Friday morning after the International Energy Agency raised its oil supply outlook for nonmembers of the Organization of Petroleum Exporting Countries.
In its Oil Market Report for January, IEA increased non-OPEC supply growth for 2017 by 100,000 bpd to 700,000 bpd for output of 58.2 million bpd. The Paris-based agency also revised up by 100,000 bpd its forecast for 2018 supply growth to 59.8 million bpd, pointing to rapid growth in oil production in the United States, Canada and Brazil.
"This represents, after the downturn in 2016 and the steady recovery in 2017, a return to the heady days of 2013-2015 when US-led growth averaged 1.9 million bpd," said IEA.
Despite this non-OPEC supply outlook, the agency acknowledged global inventories have tightened substantially since the second-quarter of 2017 after OPEC and their 10 nonmember producer allies started cutting 1.8 million bpd of their production about a year ago.
The OPEC-led production cuts are set to continue through December and if they maintain full compliance with their agreement, then the market is likely to rebalance this year, the agency said. IEA sees a modest surplus in the first half of the year and a modest deficit during the second half.
IEA said OPEC achieved 129% compliance with the agreement in December with output at 32.23 million bpd, down 130,000 bpd from November, due to sharply lower production from OPEC member Venezuela.
"Declines are accelerating in Venezuela, which posted the world's biggest unplanned output fall in 2017," added IEA in its report.
The agency said oil production in Venezuela has been sliding for a long time—it is now about half the level inherited by President Hugo Chavez in 1999. In December, Venezuelan oil output was 490,000 bpd lower than a year ago, having fallen to 1.61 million bpd.
At 9:00 AM ET, NYMEX February West Texas Intermediate crude oil futures contract was 92cts lower at $63.03 bbl, off a better than one-week low of $62.85. Intercontinental Exchange March Brent crude futures traded 94cts lower at $68.37 bbl, off a better than one-week low of $68.28.
NYMEX February RBOB futures declined 2.60cts to $1.8575 gallon while NYMEX February ULSD futures dropped 1.75cts to $2.0442 gallon, off a three-week spot low of $2.0363.
The market awaits the Baker Hughes oil rig-count report due out later Friday.
George Orwel can be reached at firstname.lastname@example.org
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