The oil market should be more balanced next year as China and the developing world use more oil while supply of fuel from North American shale grows more slowly, the Organization of Petroleum Exporting Countries said in its monthly report.
Supply of oil from non-OPEC producers is expected to grow by 300,000 barrels a day in 2016, while global oil demand will increase by 1.34 million barrels per day in 2016, up from growth of 1.28 million bpd this year, OPEC said, Reuters reported.
World oil demand growth should outpace any increase in oil supply from non-OPEC sources and ultra-light oils such as condensate, increasing consumption of OPEC crude. Total US liquids production is expected to grow by 330,000 bpd, just a third of the growth of 930,000 bpd expected this year.
“This would imply an improvement toward a more balanced market,” said OPEC’s in-house research team in the report. “Better-than-expected momentum in the global economy, especially in the emerging markets, would contribute further to oil demand growth in the coming year.”
However, OPEC said it cut its demand forecast for its crude this year, to a level far below its current output, as supplies from outside the group grow by more than previously expected. OPEC lowered its projection for 2015 by about 100,000 barrels a day, to 29.2 million bpd. That is almost 2.2 million bpd less than what the group’s 12 members pumped last month.
OPEC increased its forecast of non-OPEC supply growth this year by 180,000 bpd, to 860,000 bpd, while it raised its forecast for world oil-demand growth in 2015 by 100,000 barrels, to 1.28 million bpd.
OPEC, which pumps about a third of the world’s crude, said its total production rose in June by 283,000 barrels a day from May, to 31.38 million barrels, driven mainly by higher output from Iraq, Nigeria and Saudi Arabia.
The June total, based on secondary sources such as shippers, analysts and industry executives, exceeds OPEC’s 30 million-barrels-a-day ceiling by nearly 1.4 million barrels.
Saudi Arabia, the world’s largest oil exporter, told OPEC it produced 10.564 million bpd last month, up from 10.333 million bpd in May. The figure is 329,000 barrels a day higher than OPEC’s own secondary-source-derived estimate.
OPEC has increased production sharply over the last year as its most powerful member, Saudi Arabia, and other core producers in the Persian Gulf attempt to build market share, leading to higher inventories worldwide.
Higher OPEC production has been a major factor behind a collapse in oil prices, which are now around half their levels of a year ago. Benchmark Brent crude traded around $56.67 a barrel at 0800 GMT on Tuesday, down from a peak above $115 in June 2014.
