OPEC believes oil demand will increase next year
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, OPEC said yesterday.
In its monthly report, the 12-member Organization of Petroleum Exporting Countries said it expected world oil demand to increase by 1.34m barrels per day (bpd) in 2016, up from growth of 1.28m bpd this year.
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, it said.
"This would imply an improvement towards a more balanced market," OPEC's in-house economists said in the report.
OPEC has increased production sharply over the last year as its most powerful member, Saudi Arabia, and other core producers in the Middle East Gulf attempt to build market share, leading to higher inventories worldwide.
OPEC said Saudi Arabia reported that it pumped 10.56m bpd last month, up 231,000 bpd from May. According to industry data, that would be a record high.
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 LCOc1 traded around $58.70 a barrel at 12.30 GMT yesterday, down from a peak above $115 in June 2014.
Lower prices have squeezed high-cost oil producers including the fracking sector, and brought a sharp fall in the number of oil exploration rigs in operation, particularly across North America. (Reuters)