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OPEC be damned: EIA warns of explosive growth in crude output from Canada, Brazil and US shale

OPEC be damned: EIA warns of explosive growth in crude output from Canada, Brazil and US shale

The US Energy Information Administration (EIA) is warning that production outside of OPEC is set to rise dramatically over the next few years, driven by increases in the US, Canada and Brazil.

Production out of the US is expected to rise from an average of about 9 million bbl/day in 2016 to 10 million bbl/day in 2018. The EIA warns that an extension of OPEC's production cuts will not be enough to offset expanding US output.

In addition to US output, Canada, Brazil and Kazakhstan plan to increase production over the next two years as several major projects come online. Expectations for increases in global liquids supply have been revised higher to 1.4 million bbl/day this year, and another 1.9 million increase next year.

NON-OPEC CRUDE OIL & LIQUIDS PRODUCTION GROWTH
million bbl/day

SOURCE: EIA SHORT TERM ENERGY OUTLOOK

Energy trader Vitol also warned energy markets this week that demand growth is not keeping up with increases in global oil output. The firm estimates demand growth is only 800,000 bbl/day this year, leaving oil markets with a larger surplus than hoped for. Vitol is the world's largest oil trader.

Despite the OPEC cuts, the EIA estimates global petroleum stockpiles rose about 150 million barrels in 2016 and will rise another 70 million barrels this year. As production rises through 2018, global stockpiles are expected to add another 180 million barrels next year.

WORLD LIQUIDS FUELS SUPPLY & DEMAND
million bbl/day

SOURCE: EIA SHORT TERM ENERGY OUTLOOK

The price spread between seaborne medium/heavy oils and light sweet crude continues to narrow as OPEC dials down production of medium/heavy blends. China is now the biggest customer for US light oil exports.

The EIA lowered their forecast for oil prices once again this month, now estimating an average Brent price of US$53/bbl for 2017, down US$1 from the previous forecast. WTI is expected to trade at a US$2 discount to Brent.

Kinder Morgan plans the largest IPO in Canadian history

Kinder Morgan plans the largest IPO in Canadian history

CNRL delivers another solid quarter and charts a path to major growth

CNRL delivers another solid quarter and charts a path to major growth

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