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Commodities: IEA forecasts "explosive" growth in non-OPEC oil supplies

21-01-2018 17:25

Energy futures came under pressure from slight profit-taking on Friday after the International Energy Agency forecast a big supply-side response to crude oil futures hovering near $70 a barrel.
In a monthly update, the rich world's energy watchdog said US oil output was set for "explosive" growth in 2018, together with "substantial" gains in Brazil and Canada that would more than offset steep declines in Venezuela and Mexico.

Thus, non-OPEC supplies were seen growing by 1.7m barrels a day in 2018, the IEA said, with production in the States likely overtaking that of Saudi Arabia and closing in on Russia's.

On the back of that news, West Texas Intermediate crude oil futures for next month delivery jumped 0.91% to $63.37 a barrel on NYMEX, alongside a 1.06% drop in RBOB gasoline futures to $1.8636 a gallon.

Meanwhile, in a joint interview on Bloomberg TV with Saudi energy minister Khalid Al-Falih, Russia's top energy official, Alexander Novak, said his country was prepared to continue cooperating with OPEC, even without cutting output if needed, past the end-2018.

However, neither minister said whether then current production curbs would need to be extended into 2019, although Al-Falih said they should remain in place until the end of the year, as previously agreed.

Indeed, although excess oil inventories had been reduced by 220m barrels from the 340m barrels at which they stood at the start of 2017, Al-Falih said it was "uncertain that the pace of inventory drawdown would continue in coming months."

In parallel, base metals were mixed at the end of the week, with LME-traded aluminium, copper and lead all seeing a slight retreat, while three-month nickel, tin and zinc were all higher.

Selling in copper was nevertheless described by analysts at Sucden Financial as "aggressive" and served to push the contract down to $7,041 per metric tonne versus $7,084 at the LME open.

An early bid in lead, which later petered out, was attributed to news that more Chinese smelters had been asked to temporarily suspend output in order to cut emissions.

Among soft commodities, weakness was concentrated in cocoa, with the March 2018 ICE-traded contract erasing 2.67% to end the day at $1,931 per metric tonne.