The two most critical forecasts of global oil markets offer contrasting visions for 2018: one in which OPEC finally succeeds in clearing a supply glut, and another where that goal remains elusive, Bloomberg reported.
Organization of Petroleum Exporting Countries (OPEC) estimates that production curbs will eliminate the excess oil supplies that have depressed oil prices for three years. But International Energy Agency sees a different story. According to their view, surplus will barely budge. Fact is, both cannot be right.
OPEC and Russia have eliminated almost two-thirds of a global glut this year, writes Bloomberg, as the former rivals jointly constrict their crude production to offset a boom in U.S. shale oil. The question is whether the OPEC and its allies can deplete the rest of the oil supplies.
The global oil surplus fell from 291 million barrels to 111 millions. OPEC expects it will need to pump about 34 million barrels day in the second half, while the International Energy Agency sees a requirement of just 32.7 million a day, Bloomberg reported.
The division between OPEC and IEA lies at the expected supplies next year. OPEC expects additional 1 million barrels added by non-OPEC members. However, IEA expects that non-OPEC members will add another 1.6 millions barrels a day. The difference in divergent expectations lies in U.S. shale oil production.