An analysis of data from the Energy Information Administration (EIA) showed different insights on U.S. crude oil supply and demand through 2018. Demand for products remains relatively high, yet exports need to increase in the near future due to some refineries planning to pull out.
A glut in inventory will take place if the export activity does not pick up amid a likely increase in production.
Oil suppliers should prepare contingency plans in case a build-up in inventory occurs in the next several months. Investments in equipment such as storage tanks compliant with API 650 design standards are just some of the preventive measures.
The EIA expects production to increase 10.1 million barrels per day by Dec. 31, 2018, although production would fall to 60,000 barrels per month for the latter half of 2017.
In the meantime, oil prices recently climbed on Aug. 23 amid falling crude inventories in the country for the eighth consecutive week, as well as a looming storm in the Gulf Coast.
In mid-August, inventories nationwide dropped to 3.3 million barrels, which was lower than the forecast of 3.5 million barrels among analysts. The industry, however, ignores this until it sees a similar trend from around the world.
Still, the Organization of the Petroleum Exporting Countries (OPEC) has become concerned about the increasing production in Libya, which is a member country not covered by an agreement for limiting output until March 2018.
OPEC and Russia have agreed to reduce production by an estimated 1.8 million barrels per day from January 2017 to March 2018 to resolve a global oversupply.
Different factors affect the movement of crude oil exports, which affect prices contingent on supply and demand. There is some good news for energy suppliers, however, as the EIA expects demand to remain stable through 2018.