Oil glut may run dry in three years

As the country with the world’s largest proven oil reserves, Venezuela has the potential to influence the oil markets in a big way.

In a reflection of the challenges the global oil market will face in the coming years, some one-third of demand growth will come from trucks in Asia.

But the price gains have been capped by the slow progress in reducing the glut of oil in storage worldwide, as well as the sharp bounce back in production in the U.S. shale oil sector, where there is also an expectation that the USA president Donald Trump’s pro-oil policies will spur the sector on further. That led to widespread retrenchment on the part of debt-laden major oil producers. In addition, OPEC members agreed to short-term cuts to boost prices.

However, oil investments dropped sharply in both 2015 and 2016, and if that trend continues into 2017, there will be a problem in three years. Bullish sentiment over the 1.8 million b/d of producer cuts underway has taken a few knocks, with Russian Federation last week reporting its February production flat from January, implying no progress from a cutback of just 100,000 b/d, a third of what the country has pledged.

That growth will come mainly from the oilsands.

“The United States responds more rapidly to price signals than other producers”.

The Joint Technical Committee was created January 22 under the OPEC Monitoring Committee, designed to monitor the implementation of countries’ obligations to cut oil production. Oil demand is expected to pass the significant threshold of 100 mbd in 2018. We do not see a peak in oil demand any time soon. China, meanwhile, has seen relatively slower GDP growth and population growth recently. Increasing needs and stability from emerging markets is also forecast to increase oil demand to as much as 104 million barrels per day by 2022, concluded the report.

Pump prices nationally slipped fractions of a penny over the weekend, reaching today’s national average price for regular gasoline of $2.31 per gallon. He also pointed out that his Ministry, basing itself on the “rebalancing of the market”, predicts oil prices in 2017 in the range of $55-60 a barrel.