The International Energy Agency revised higher its US oil production growth forecasts for 2018, stressing that rapidly expanding shale output is a major factor offsetting Opec-led supply cuts.

The latest body to raise estimates, following the US energy department’s statistics arm and Opec’s own research unit, the IEA said: “this year promises to be a record-setting one for the US.”

Production growth, the IEA said in its monthly market report, was returning “to the heady days of 2013-2015” with US total output on course to overtake Saudi Arabia and rivalling Russia. Still, the oil market will be broadly in balance this year.

Big producer nations have feared a price rebound in recent weeks — to a 2014 high of around $70 a barrel — could spur a flood of new shale oil supply, undermining efforts by global producers to curb output.

Opec countries and allies outside of the cartel such as Russia agreed late last year to extend a supply cut deal for the whole of 2018 as they seek to further reduce excess stockpiles and bolster prices.

“The historically high performance rate for the producer pact, however, was met with an equally remarkable increase in US production, which offset roughly 60 per cent of the realised cuts,” the IEA said.

The IEA said the impact of the reduction was “further blunted” by a rebound in output from Libya and Nigeria, which have been excluded from the cuts deal because of conflict in both countries.

Even so, the IEA said should Opec and Russia maintain their compliance then “the market is likely to balance for the year as a whole with the first half in a modest surplus and the second half in a modest deficit.”

A silver lining for producers enacting supply cuts, the IEA said, was that they earned more in 2017 while pumping less. Opec producers earned an extra $362m a day, with the cartel’s largest producer making nearly $100m a day in additional revenue. Russia took in most of all, earning an additional $117m a day. This should ensure further compliance with the deal this year, the IEA said.

Global oil supply in December fell by 405,000 b/d to 97.7m b/d largely due to lower North Sea and Venezuelan output. A sharp decline in Venezuelan supply, last year’s largest unplanned outage, cut Opec crude output to 32.2m b/d last month.

Rapid US growth, and also Canada and Brazil, will drive up non-OPEC supply by 1.7m b/d in 2018, versus last year’s 700,000 b/d increase. Total non-opec production is forecast at 59.8m b/d, of which the US will comprise a record 10.4m b/d.

“Whether or not the recent price rise has run out of steam and seventy really is plenty remains to be seen…such are the geopolitical uncertainties and the ever-dynamic prospects for US shale that we should expect a volatile year,” said the IEA.

The IEA maintained its demand oil growth estimate for 2018 at 1.3m b/d with total consumption expected at 99.1m b/d.

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