Supportive to the market were comments from top exporter Saudi Arabia that the Organization of the Petroleum Exporting Countries and other producers would continue to cooperate on oil output cuts beyond 2018.
Friday's release of the latest International Energy Agency report forecasting "explosive" USA oil output that will overtake Russian and Saudi Arabian production triggered more worries of the Organization of the Petroleum Exporting Countries (OPEC) ending its crude cutback strategy early in order to discourage the growth. "Short-cycle production from the U.S.is reacting to rising prices and in this report we have raised our forecast for crude oil growth there in 2018 from 870,000 b/d to 1.1 million b/d".
If the U.S.is the chief victor of the energy industry in 2018, it is followed closely by Saudi Arabia, which has persistently called for high crude prices because it will add value to its initial public offering of Saudi Aramco; and as pundits tousled over what will happen to the market next, Amin Nasser, chief executive officer for the state-owned company, announced that it will be ready for the IPO in the second half of this year. Neither minister said whether the cuts would continue next year. This is because the IEA believes the recent price increase on crude could dampen oil demand growth to some extent, despite a healthy global economy.
U.S. West Texas Intermediate (WTI) crude futures were at $57.72 a barrel at 0130 GMT, 27 cents, or 0.5 percent below their last settlement.
Consequently, the participants of the OEPC deal meet in Muscat, Oman on 21st January 2018 to discuss their strategy. But both Falih and UAE minister Suhail al-Mazroui said they did not think the rise in prices would hurt global demand for oil.
Given that oil prices have already reached the $70-per-barrel mark within a few weeks of the extension, we believe that there is a strong possibility that Russian Federation, after discussing the implications with the OPEC nations, may decide to discontinue the output restrictions in a future meeting, perhaps in June 2018.
US crude CLc1 fell 7 cents to $63.30 a barrel by 1:26 p.m. EST (1826 GMT).
The volume of crude import would remain little changed at 213.5 million metric tonnes in 2017-18 but the value would jump to $81 billion from $70 billion in the previous year.
Based on that, the agency estimates non-OPEC crude supply will rise by 1.7 MMBPD this year, compared to a 0.7 MMBPD increase in 2017.
After falling the previous week due to cold weather, U.S. crude production rose to 9.75 million barrels day last week.
"Global growth has become synchronized and accelerated above trend", USA bank Morgan Stanley said in a note.