The International Energy Agency expects US oil production to increase further which could see supply levels outgrow demand.
Research conducted by the International Energy Agency (IEA) shows that oil output in the US is showing no signs of slowing down and the nation could become the world’s largest non-OPEC oil supplier by the end of 2018.
If production levels rise as predicted then the US would overtake Russia and Saudi Arabia as the global leader in oil production. The IEA claims that US crude output increased by 846,000 barrels a day during August, September and October 2017 and further growth cannot be ruled out.
The increase in prices following an extension to OPEC production cuts sparked more oil drilling in the US, resulting in higher production and increased fuel hedging by major consumers. This undermined the efforts made by OPEC and prices have recorded significant losses in the last two weeks.
The IEA claims that global demand growth is healthy and estimates it at 1.6 million barrels a day, however, a further rise in production could create a glut in supply.
Market volatility cannot be ruled out in the coming months as the outlook for the global economy is positive which could lead to even higher demand growth; this could help oil contracts hold their current price even if US production continues to rise.
You can keep up to date on oil movement and how this effects gas and electricity prices with our daily energy market analysis.