IMF: North American Oil Glut to Keep Prices Low
The International Monetary Fund said global crude oil prices have been relatively lower because of the growth in oil supply from North America. With U.S. oil production on pace to eclipse 9 million barrels per day near-term, the trend should continue through next year.
Nearly all of the growth in global oil production is coming from the United States and Canada. Combined, North American production growth is around 1.2 million barrels per day from U.S. shale oil and Canadian oil sands. IMF said this growth was spilling over to the global marketplace. ”Crude oil prices have edged lower, mainly as a result of the continued supply surge in North America,” it said.
The U.S. Energy Information Administration said in its market report for April it expected the price for Brent crude, the global benchmark, to average $105 per barrel this year, but fall to $101 in 2014. For West Texas Intermediate, the U.S. benchmark, prices should average $96 per barrel. That’s $1 per barrel higher than EIA reported last month, although the administration expects WTI to dip to $90 per barrel next year. WTI is less than the Brent equivalent because of the increase in production in the United States.
EIA said in its report that a harsh winter season in the lower 48 states curbed oil production, though a recovery is on its way. Seasonal issues aside, EIA said it expects strong growth in crude oil production from the Bakken, Eagle Ford, and Permian shale basins through 2015.