US oil boom to erode Opec market share in 2014: IEA

The picture painted by the IEA represents a dramatic change in patterns seen in recent decades when the world was expected to get increasingly reliant on Opec’s oil with supplies from other regions declining or remaining stagnant.Reuters/LondonThe North American shale oil boom could spur the biggest rise in non-Opec supply growth in the past decades next year helping meet strong global demand and eroding the market share of Opec countries, the International Energy Agency said yesterday. The West’s energy agency said in its monthly report that even though global oil demand growth in 2014 will rise to its strongest levels since 2010, the supply picture remained quite comfortable, meaning oil prices should avoid steep spikes. “The 2014 outlook... should give oil bulls some cause for alarm. Non-Opec supply growth looks on track to hit a 20-year record next year, surpassing the 1.3mn bpd high reached in 2002,” the IEA said. While demand growth is also forecast to gain momentum, rising to 1.2mn bpd in 2014 from 0.930mn bpd in 2013, this will still fall short of forecast non-Opec supply growth. As a result, the need for Opec oil will decline. The IEA said the “call” on Opec crude is set to edge down in 2014 to 29.4mn bpd from 29.6mn this year and versus current Opec production of 30.61mn bpd. The picture painted by the IEA represents a dramatic change in patterns seen in recent decades when the world was expected to get increasingly reliant on Opec’s oil with supplies from other regions declining or remaining stagnant. In 2014, North American supply is expected to grow by close to 1mn bpd and other countries including Brazil and Kazakhstan are also expected to contribute. Major pre-salt projects in Brazil, the Kashagan field in Kazakhstan, West Chirag in Azerbaijan, and new fields in the North Sea are expected to offset declining production elsewhere. “Production could prove even higher than forecast in Russia, the US, Canada, and Brazil, especially if prices remain at or above current levels,” the IEA said. On the demand side, China is forecast to remain the main engine of demand growth in 2014 adding 385,000 bpd, followed by the rest of non-OECD Asia adding 325,000 bpd and the Middle East, where demand should rise by 225,000 bpd. “While demand in the OECD region is expected to contract, it will do so at a much slower pace than has been the case in the last few years since the 2008 financial crisis, edging down by 0.4% in 2014 compared to the 0.8% drop of 2013.” Top oil consumer the US will see a modest 0.1% drop in demand to 18.6mn bpd in 2014, as efficiency gains continue to dampen the US demand outlook. In China, the world’s No 2 oil user, the IEA sees growth of 3.9%, taking 2014 consumption to around 10.3mn bpd.US oil sinks, traders take profit, spreads in focus

US crude oil futures dipped from a 15-month high yesterday as investors sold contracts to take profit after three weeks of sharp gains and as US data showed a rise in the number of Americans filing for unemployment benefits last week. Brent’s premium to US crude narrowed to the smallest since November 2010 at $1.32, a day after US data showed the biggest two-week drop on record in crude stockpiles, indicating strong US demand for domestic crude oil. The spread between US gasoline futures and Brent crude oil futures widened to $19.30 a barrel, its widest since April 2. Brokers and traders said refineries were using the spread as a financial hedge should refining margins fall. Front-month US crude oil futures were down $2.12 a barrel, or nearly 2%, at $104.40 at 12.10pm EDT (1610 GMT). The session high of $107.45 was the highest since March 2012. The front-month contract jumped nearly 3% in the previous session, its biggest daily rise since early May. The contract has gained $15 a barrel since June 28. “Today’s jobless claims threw a wrench in the market,” said Bill Baruch, senior market strategist at iitrader.com in Chicago, Illinois. “The market’s had a great run. You’ve seen a $15 gain in three weeks. Traders are taking profit. You don’t want to be short over the weekend.” Initial claims for state unemployment benefits increased by 16,000 to a seasonally adjusted 360,000, the US Labor Department said. Other data showed prices for US imports and exports fell in June for the fourth straight month, hit by cooler economic growth worldwide. Brent crude oil futures fell $1.08 to $107.43, after hitting $108.93, its loftiest since April 3.