Mumbai: The prices of crude oil, which has seen a spike in recent weeks, is expected to reverse over the coming months as supply from non-Opec is likely to increase sharply in 2018. According to experts, non-OPEC crude supply is expected to rise by 1.6 million barrel per day to 59.6mn bpd in 2018 as compared to a relatively modest increase of 0.6mn bpd in 2017, which was impacted by disruptions.
“We expect a reversal of the recent spike in Dated Brent crude price over the next few months, driven by our estimated 0.2 mn bpd increase in global oil inventories during first half of 2018, based on seasonally weak global oil demand, rising growth in non-Opec supply and stable Opec production around 32.5mn bpd,” said Kotak Securities. It noted that the US oil production is expected to contribute 1.1mn bpd of incremental supply in CY2018 led by continued recovery in shale oil production, underpinned by rising rig count and incremental drilling of horizontal wells.
Further, ramp-up of production from certain projects in Brazil, Canada, UK and Kazakhstan is expected to add the incremental barrels. “We expect crude to range between $55-65 per barrel based on IEA’s CY2018 forecasts, which suggest incremental non-Opec supply of 1.6 mn bpd will exceed 1.3 mn bpd of growth,” it added.
