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Friday 30 September 2016

Oil glut now forecast to continue into next year

Alex Lawler

Published 13/09/2016 | 02:30

OPEC expects non-OPEC supply to rise by 200,000 barrels per day in 2017, versus a previously forecast 150,000 bpd decline. Photo: Reuters
OPEC expects non-OPEC supply to rise by 200,000 barrels per day in 2017, versus a previously forecast 150,000 bpd decline. Photo: Reuters

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.

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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)

Irish Independent

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