Oil prices were broadly steady last Thursday. Brent crude futures LCOc1 were last down 13 cents on the day at $64.76 a barrel, while US West Texas Intermediate (WTI) crude futures CLc1 were up 1 cent at $60.97 a barrel.
Global oil demand is expected to pick up this year but supply is growing at a faster pace, leading to a rise in inventories in the first quarter of 2018, said the International Energy Agency (IEA). The oil price has moved in sync with stocks uninterruptedly for the past 99 trading days.
Looming over markets has been a relentless climb in US crude output which hit another record last week by rising to 10.38 million barrels per day, up by more than 23 per cent since mid-2016. Commercial crude inventories were up by 5m barrels, at 430.93m barrels.
Recently the Organisation of the Petroleum Exporting Countries (Opec), in a monthly report, said non-Opec producers would boost supply by 1.66m barrels per day in 2018.
“For 2018, higher growth is expected on the back of the projected increase in U.S. shale production following a better price environment not only for shale producers, but also for other countries such as Canada, the UK, Brazil and China,” Opec said.
The IEA raised its forecast for oil demand this year to 99.3m bpd from 97.8m bpd in 2017. Commercial oil inventories in industrialised OECD nations rose in January for the first time in seven months to 2.871bn barrels, 53m barrels above their five-year average, the IEA said.
Ageing fields and high production costs dragged down China’s domestic crude oil production in January and February. In the first two months of 2018, China’s crude oil production dropped by 1.9pc from the same period last year to average 3.76m bpd.
The decline so far this year could be attributed to the drop in production of China’s largest oil producer, China National Petroleum Corp (CNPC), whose production fell by 1.6pc year on year.
Petro China, the public division of China’s state giant CNPC, has become the third-largest oil and gas company globally, with a market cap exceeding Chevron’s since the start of this year.
The average market cap of Petro China since the start of the year, according to Bloomberg, has come in at $232 billion, versus $230bn for Chevron. Its Hong Kong-listed shares trade at a 33pc discount to the company’s book value. This compares with a 68-premium to book value for Exxon’s stock and a 1.34x premium to book value for Shell.