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Will Global Crude Oil Demand Fall in 2017 and 2018?

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Nov. 20 2020, Updated 3:43 p.m. ET

IEA’s report

The IEA (International Energy Agency) published its monthly oil market report on November 14, 2017. It reported that OPEC’s crude oil production fell by 80,000 bpd (barrels per day) to 32.53 MMbpd (million barrels per day) in October 2017—compared to the previous month. Any fall in OPEC’s crude oil production is bullish for oil (BNO) (DBO) prices.

Crude oil prices are near a 30-month high. Higher oil prices benefit energy producers’ (IEZ) (XES) earnings like Whiting Petroleum (WLL), Noble Energy (NBL), Marathon Oil (MRO), and Energen (EGN).

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Global crude oil demand 

The IEA downgraded the global crude oil demand estimates for 2017 and 2018, which weighed on oil (USO) (USL) prices on November 14, 2017. However, OPEC’s monthly report has been driving crude oil (UCO) (UWT) prices higher. The IEA predicts that global crude oil demand will rise by 1,500,000 bpd (barrels per day) in 2017, which was 50,000 bpd lower than previous estimates. It also expects global crude oil demand to rise by 1,300,000 bpd in 2018, which was 190,000 bpd lower than the previous forecast.

Non-OPEC supplies 

The IEA expects crude oil supplies from non-OPEC producers to rise by 1,400,000 bpd in 2018. It would offset most of the benefits from ongoing production cuts and pressure oil prices.

Impact  

The IEA expects crude oil supplies to exceed the demand in 4Q17. It would pressure on oil (BNO) (USO) prices. Record US crude oil production and exports could add to the global supplies. It would also weigh on oil prices.

Read Why Doubts Linger about Sustainability of Crude Oil Bull Market and Are Hedge Funds Turning Bullish or Bearish on Natural Gas? for the latest updates on crude oil and natural gas.

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