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Crude futures: Crude weaker in Europe on higher US production forecast

London — 1230 GMT: Crude futures were lower at midday in Europe Friday after the International Energy Agency's monthly report forecast rapid growth in oil output in 2018.

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At 1230 GMT, March ICE Brent futures stood at 68.72b, down 59 cents/b on Thursday's settlement price, while February NYMEX WTI crude was down 50 cents/b at 63.45/b.

The IEA revised up its estimate of growth in non-OPEC supply in 2018 by 100,000 b/d to 1.68 million b/d but kept the outlook for global oil demand unchanged.

The US alone will see production grow 1.1 million b/d in 2018, up from a previous estimate of 870,000 b/d, which represented "a return to the heady days of 2013-2015 when US led growth averaged 1.9 million b/d," the IEA said.



That was in contrast with OPEC's assumption of 1.15 million b/d growth for non-OPEC countries, which would lead to a supply deficit of approximately 700,000 b/d.

"The OPEC's view on non-OPEC supply is completely unrealistic," Commerzbank analyst Carsten Fritsch said. "The IEA are much more realistic with their forecast."

Analysts also expressed concern as to whether a price above $70/b was sustainable in the long run.

"At $70 the wheels appear to have come off. At a price of $70, there is so much product coming out of the US, the market cannot ignore that," Fritsch said.

Nevertheless, other news on OECD and US stock levels was supportive of prices. OECD stocks declined twice the average rate in November, according to analysts, with stocks declining further in December.

Meanwhile, the US crude oil inventories reduced by a larger than expected 6.86 million barrels during the latest week, with Cushing stocks falling to 42 million barrels, to be down 27 million barrels from last year's high.

However, overall US crude inventories remained above the five-year average.

The dollar, which has been supporting oil prices due to its weakness, moved lower Friday with the US Dollar Index down 0.08 at 90.23.

February RBOB futures were down 1.48 cents at $1.8687/gal, while February ICE low sulfur gasoil futures were down $3.50/mt at $608.25/mt.

--Pascal Dick, pascal.dick@spglobal.com
--Edited by Dan Lalor, daniel.lalor@spglobal.com

(Corrects IEA non-OPEC growth revision)