Investing.com – Crude oil prices settled higher after the International Energy Agency warned that oil demand could outstrip supply despite the ramp up in shale output.
On the New York Mercantile Exchange crude futures for March delivery rose 23 cents to settle at $61.19 a barrel, while on London's Intercontinental Exchange, Brent gained 17 cents to trade at $65.06 a barrel.
“With supply from Venezuela clearly vulnerable to an accelerated decline, without any compensatory change from other producers, it is possible that the Latin American country could be the final element that tips the market decisively into deficit,” the IEA said in its monthly report.
Venezuela’s oil industry has remained under pressure as growing political turmoil continues to drive investment away from the industry with looming U.S. sanctions also weighing on sentiment.
The IEA revised upward its estimate of global oil demand growth in 2018 by 90,000 barrels a day (bpd) to 1.5 million bpd on expectations for ongoing growth in OECD countries.
The IEA’s report comes a day after OPEC raised its growth forecast for non-OPEC production in 2018 by 280,000 barrels a day (bpd) to 1.66 million bpd this year, warning that non-OPEC supply growth, led by the U.S., will outstrip growth in global oil demand in 2018.
U.S. oil output hit a record last week rising to 10.38 million bpd, according to the Energy Information Administration. The ramp up in U.S. output is widely viewed as one of the headwinds for oil prices, offsetting OPEC and Russia's efforts to ensure global crude supplies fall to the five-year average.
The oil cartel together with Russia agreed in November to extend the 1.8 million bpd output cuts through 2018, to rid the market of excess supplies.