Mumbai: Even as analysts and fund managers expect corporate earnings to recover later this year, rising crude oil prices could bite into the margins of some companies.
That compares with estimated overall global demand for oil of 97.8 million bpd.
This confusion is giving rise to fears and risks despite calming statements by OPEC members, who will be meeting over the weekend hoping to have a new strategy to meet this unexpected upturn.
IEA estimated OPEC supply cut compliance at 95%, although supply discipline from the non-OPEC signatories to the deal - including Russia, Kazakhstan and Malaysia - was less strong, at around 82%.
OPEC and other major producers first agreed to cut production in late 2016, a response to oversupply that sent prices to as low as $26 a barrel earlier that year.
Kuwait's oil minister Bakhit al-Rashidi said on Wednesday there is no plan or intention so far to exit from a production-cutting agreement among OPEC and non-OPEC oil producers.
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The question is when, and not if, crude oil prices would start correcting down.
Over the last 3 months, Brent crude has gone from close to $55 a barrel to $70 a barrel, which is a good 27 per cent jump in price.
"Relentless growth should see the U.S. hit historic highs above 10m bbl/day, overtaking Saudi Arabia and rivalling Russian Federation during the course of 2018 - provided OPEC/non-OPEC restraints remain in place", it added.
The IEA calculated that the global oil supply eased by 405,000 bpd to 97.7 million bpd in December, but this was due mostly to unplanned outages in the North Sea and lower Venezuelan output, the IEA said. The investment bank sees Brent and West Texas Intermediate average price forecasts at Dollars 62 and USD 57.5 per barrel for 2018, respectively.
Jeffrey Halley, market strategist at futures brokerage Oanda in Singapore, said crude futures had been at "overbought levels for an extended period as record speculative longs built on the futures markets".
The U.S. energy surge is not limited to just oil.
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Faleh said oil producers had not yet achieved their target of reducing world stocks to normal levels and striking a balance between supply and demand.
The big support behind this really came from the promised 1.8 million barrels per day cuts from OPEC and allied nations. Despite a strong start in 2018 and market being dominated by buyers, the upward trend in prices may slow down its accelerated growth rates and adjust it by 5-7 Dollars per barrel in the next two months.
Faleh however said the new framework for cooperation might differ from the current agreement and its production quotas. "They can not afford another price slump".
It comes after US President Donald Trump a year ago vowed to withdraw his country from the Paris Climate Change Agreement, claiming signing the accords had harmed the US' economic prospects.
OPEC said Thursday that it expects USA oil production to increase as prices stay high enough to offset the rising costs of oilfield services, adding to worries that new supplies will tamp down the rally that has pushed oil prices back above $60 a barrel.
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