Oil prices slumped from session highs on Thursday, December 14, after the International Energy Agency increased its forecast for U.S. oil output growth in 2018, raising the prospect of excess supply.
Brent crude futures were at $62.49 a barrel at 1107 GMT, up 5 cents but easing back from a session high of $63.14.
U.S. West Texas Intermediate (WTI) futures eased 3 cents to $56.57 a barrel, slipping from a high of $56.93.
The IEA raised its U.S. crude output growth forecast for 2018, saying it would climb by 870,000 barrels per day (bpd) compared with its November forecast of 790,000 bpd.
It mirrors upward revisions issued by the Organization of the Petroleum Exporting Countries and the United States.
“The IEA underlined the same take that the U.S. Energy Department had the day before yesterday and OPEC had yesterday,” Bjarne Schieldrop, chief commodities analyst with SEB Bank, adding that further upward revisions for growth could follow.
With cash pouring into the U.S. shale oil industry, the United States is on track to deliver up to 80 percent of the world’s oil production gains through 2025, the IEA estimates.
OPEC revised its estimate for U.S. oil output growth for 2018 to 1.05 million bpd, while the U.S. Energy Information Administration increased its growth forecast to 780,000 bpd.
The IEA expects the oil market to have a surplus of 200,000 bpd in the first half of next year before reverting to a deficit of about 200,000 bpd in the second half. This would mean 2018 overall would show “a closely balanced market”.
For now, Brent prices remain underpinned by a major outage on the Forties crude pipeline that is expected to last several weeks.
Operator Ineos declared force majeure on crude oil, gas and condensate deliveries from the pipeline, a source familiar with the matter told Reuters on Wednesday.
A fall in U.S. crude inventories last week also lent some support. Stocks fell by 5.1 million barrels in the week to Dec. 8, the fourth consecutive week of decline, to 442.99 million barrels, the lowest since October 2015, Reuters reports.
