From Platts The Barrel blog:
Oil demand, prices and decelerating US supply
Global oil supply and demand forecasts for 2015 have changed significantly recently, but these changes have largely cancelled each other out: the outlook is still one of a market roughly in balance. However, this ignores the tectonic shifts taking place under the surface. US output growth is decelerating. If futures markets pre-empt this, as they did in February, they risk reversing it, which could produce another drop in prices, as Ross McCracken, managing editor of Platts Energy Economist, explains.
The rapid descent of crude oil prices since last summer has impacted forecasts for both demand and supply in 2015. However, it is at times of rapid market change that forecasting becomes most difficult. If history is any guide, current forecasts are more likely than others to be subject to major revision as the year progresses.
In July of 2014, before crude prices collapsed, forecasts from the International Energy Agency, US Energy Information Administration and OPEC suggested that world oil demand would rise by about 1.35 million b/d in 2015 and that the global supply/demand balance would be very slightly positive.
Despite the drop in the crude price from above $100/b to below $50/b in January, current demand growth forecasts from the three agencies now average only 1.0 million b/d. The reduction is the result of the decline in expectations for global GDP growth.... MUCH MORE
...Yet overall, total US crude production continues to rise. The EIA estimated the four-week moving average for February 20 at 9.242 million b/d, up 116,000 b/d from the end of last year.
However, the rate of increase is slowing, showing a deceleration trend similar to that of the EIA’s forward projections for shale oil output.
On current trends, the EIA’s projections for month-ahead shale output growth should turn negative in April or May. Actual US production should start to contract sometime in second-half 2015. But if futures markets bounce, as they did in February, in expectation of this decline, they risk reversing it, which could produce another dip in prices.
