Oil glut now forecast to continue into next year
OPEC raised its forecast of oil supplies from non-member countries in 2017 as new fields come online and US shale drillers prove more resilient than expected to low prices, pointing to a larger surplus in the market next year.
Demand for crude oil from the Organization of the Petroleum Exporting Countries (OECD) will average 32.48 million barrels per day (bpd) in 2017, OPEC said in a monthly report yesterday. That is down 530,000 bpd from the previous forecast.
The prospect of a larger surplus than expected adds to the challenge of OPEC and non-members such as Russia, who are making a renewed attempt to restrain supplies.
Oil LCOc1 is trading at $47 a barrel, half its level of mid-2014, as a supply glut that OPEC hoped cheap oil would banish sticks around. OPEC revised up its 2016 and 2017 non-OPEC supply forecasts, citing factors including the start up of Kazakhstan's Kashagan oilfield and a lower-than-expected decline in US shale output, and said the immediate outlook was for more production.
"It is expected that there will be higher non-OPEC production in the second half of 2016 compared to the first half," OPEC said in the report.
OPEC expects non-OPEC supply to rise by 200,000 bpd in 2017, versus a previously forecast 150,000 bpd decline. The revision is mostly due to Kashagan, OPEC said, as the long-delayed giant field finally starts up. On top of that, the forecast for this year was revised up by 180,000 bpd. OPEC kept output near a multi-year high in August. (Reuters)