IEA sees United States oil output at all-time high by 2021

LONDON-A global oil glut should stop ballooning next year and markets will start to rebalance, eventually forcing a rebound in oil prices, according to the International Energy Agency.

“Only in 2017 will we finally see oil supply and demand aligned but the enormous stocks being accumulated will act as a dampener on the pace of recovery in oil prices”, it added.

“But at the risk of tempting fate, we must say that today’s oil market conditions do not suggest that prices can recover sharply in the immediate future – unless, of course, there is a major geopolitical event”.

Despite the contractions within the US oil industry, the IEA forecast that USA production would recover to “reach an all-time high” of 14.2 mb/d by the end of 2021, but only after falling in the short term. US crude production is expected to drop 600,000 barrels a day in 2016 and another 200,000 barrels a day in 2017. That may seem like a lot of new oil coming to market but it is much less than the 11 million barrels a day added between 2010 and 2015.

But a number of factors are prompting energy companies to reconsider expansion of production, the IEA said.

Exporting countries and other producers have been debating whether to rein in their production to halt an oil-price crash.

The IEA’s new outlook is the latest sign that oil forecasters are bracing for a “lower-for-longer” price environment.

In 2018, the consultancy, which advises 29 oil-importing nations, believes daily global demand will surpass production by 400,000 barrels; later, by 700,000 in 2019 and 1 million in 2020.

That will be the first time since 1986 that upstream investment has fallen for two consecutive years, the agency said, warning that the collapse could be storing up problems for consumers further down the track.

The report forecast OPEC crude oil production capacity would rise by 800,000 bpd by 2021 as lower oil prices force the re-consideration of development projects in the early period of the forecast.

As a result of the increase in demand and weaker growth in supply, OPEC’s share of the total market for crude will reach 33.8 percent in 2020, up from last year’s projection of 32.4 percent.

“Iran, now free of nuclear sanctions, emerges as the biggest source of growth within OPEC over the six-year forecast period”.