The production cuts initiated last January by Organization of the Petroleum Exporting Countries (OPEC) and its allies - particularly Russian Federation - had drawn down oil supplies in the world's developed countries by an estimated 115 million barrels in the 12 months through October 2017. Two months ago no one predicted prices to rise beyond what they were at that time. Crude demand will expand by about 1.5 million barrels a day in 2018, OPEC Secretary-General Mohammad Barkindo said at a conference in Abu Dhabi.
In sum, the report claims these so-called "Wildcards" in many parts of the world could be the catalyst for higher oil prices.
Just as worries in 2017 about USA output continues unabated in 2018, so too has another less-reported 2017 phenomenon that could weigh heavily on a market rebalance: the prevalence of OPEC members who, despite giving media-friendly lip service to the output reduction deal, are overproducing anyway.
"Many believe that oil prices above $60 will self-correct as this level of prices will encourage substantially more drilling in US shale which will lead to increased supply", said William O'Loughlin, investment analyst at Australia's Rivkin Securities.
"We would argue that an ongoing rise in oil prices provides an important explanatory factor as regards the rise in long-end yields this week and in recent months", a team of Rabobank strategists led by Richard McGuire wrote in a note on Wednesday, as carried by Bloomberg. In both 2018 and 2019, EIA expects total global crude oil production to be slightly greater than global consumption, with USA crude oil production increasing more than any other country.More news: Abbas confirms Abu Dis offered as Palestinian capital
The threat comes not just from onshore shale production, but prices are now high enough that major multibillion-dollar offshore projects could get financing. However, the IEA adds, "A lot could change in the next few months but it looks as if the producers' hopes for a happy New Year with de-stocking continuing into 2018 at the same 500 kb/d pace we have seen in 2017 may not be fulfilled".
Ministers from leading OPEC and non-OPEC producers will discuss the possibility of a smooth exit from a global deal to cut oil output next week, Russia's energy minister said on Friday. A production-cutting pact between the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers helped to raise oil prices on the global market last week to levels not seen in three years. If global demand for oil keeps increasing as it has - mainly due to the fall in prices - the level of supply will not be able to catch up. Add to that the shutdown of a 0.4 mbd pipeline in the North Sea and a reduction of 0.29 mbd in United States crude oil production in the last few days of 2017 and first week of 2018.
Other bank analysts believe the increases could come sooner.
According to the U.S. Energy Information Administration, U.S. crude inventories fell 4.9 million barrels last week, more than the 3.9-million decline forecast.