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North American producers may fret about market access, but they are not showing any signs of slowing down their production cycle.
A new report by the International Energy Agency notes American and Canadian oil fields will lead the non-OPEC brigade next year to crank up a record 1.3 million barrels per day of new production — its highest combined effort in 20 years.
“North American production will remain robust in 2014 with U.S. crude production forecast to add 530,000 bpd and oil sands projected to add 140,000 bpd,” the IEA said in its monthly report published Thursday.
Key Canadian projects expected to come on stream over the next 18 months include Brion Energy’s (formerly Dover) 100,000-bpd Mackay River Commercial project, the 45,000-bpd first phase of Canadian Natural Resources Ltd’s Kirby project and Korean National Oil Corp.’s first Canadian oil sands venture of 30,000-bpd.
Other non-OPEC producers are stepping up too, with Brazil expected to add more than 200,000 bpd and Kazakhstan and South Sudan ramping up production in 2014. Even OPEC is resigned to the rise of its rivals, and is expecting a 300,000 bpd decline in demand for its crude in 2014, on top of the 400,00 bpd decline it expects this year.
“This would imply a further build in global crude inventories, which currently stand at high levels,” OPEC said in its monthly report published Wednesday.
The prospect of new supply has not dented an oil price rally with West Texas Intermediate hitting a 15-month high on Friday at $107.45, and within $2.5 from being at par with Brent crude.
The United States raised its 2013 price forecasts for both WTI and Brent in the Energy Information Administration’s most recent energy outlook. It expects WTI to average US$94.65 a barrel this year, $1.4 higher than its June projection, while Brent will average $104.68, up 3 cents from last month’s projection.
Alberta floods, the start of the BP refinery in Whiting refinery, which is expected to take in more Canadian heavy oil, and improving North American economic indicators have helped improve market sentiment.
However, a decline in Chinese oil imports in the first half of the year could lead to a steep fall from the heady triple-digit figures.
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