According to the International Energy Agency (IEA), fast rising production in non-OPEC countries, led by the U.S., is likely to grow by more than demand in 2018. For now, the upward momentum that drove the price of Brent crude oil to $70/bbl has stalled; partly due to investors taking profits, but also as part of the corrections we have seen recently in many markets. Most importantly, the underlying oil market fundamentals in the early part of 2018 look less supportive for prices.
The components of the oil market balance are dynamic, and a lot can change in the next few months: the deteriorating situation in Venezuela is one obvious candidate, and the apparent buoyancy of the global economy could deliver higher demand growth than we currently anticipate. As a result, prices could be maintained at recent levels even as U.S. production rises. If so, most producers will be happy, but if not, history might be repeating itself.