Opec expects a brighter outlook for the oil market as the low prices of the past year bite further into higher-cost production growth, and with demand forecast to pick up in coming months.
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In a monthly report, the Organization of the Petroleum Exporting Countries (OPEC) forecast the world would need 30.82 million barrels per day (bpd) from the group next year, up 510,000 bpd from the previous prediction.
Crude oil prices were relatively stable in September and rallied early this month on “expectations of a lower USA output and rising tension in the Middle East”, the IEA said.
Oil prices edged up on light bargain hunting on Tuesday, with gains capped by a report from the worldwide Energy Agency (IEA) forecasting a global supply glut would last through 2016.
However, oil prices soon turned negative, a decline partly attributed to profit-taking after U.S. crude prices jumped nine per cent last week. US light crude was up 15 cents at $49.78. USA oil drillers have idled more than half the nation’s rigs since last October, data from oilfield-services company Baker Hughes Inc. shows.
While the agency boosted estimates for 2016 non-OPEC supply, amid stronger-than-expected output from Russian Federation, Brazil and Canada, it will still contract sharply next year.
Since 2014, oil prices have declined significantly, causing serious difficulties for OPEC’s individual commodity exporters, whose economies are burdened by lack of oil revenue.
“Crude oil import growth YTD is running at nearly 10 percent with the extra growth largely a reflection of commercial and strategic stockpiling as more storage facilities come online and also China’s shift to a net exporter of refined products”, Barclays analysts said in a research note. The country will increase production by as much as 100,000 barrels a day from current levels and plans for output to reach 3.2 million barrels a day, he said, without specifying a date.
“Today there are no ideas or demands from the member states to make any big change in OPEC’s decision”, Kuwait Oil Minister Ali al-Omair told reporters, referring to OPEC’s move of November 2014.
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OPEC’s numbers are consistent with those of the the U.S. Energy Information Administration, which has predicted that US crude production will average about 8.9 million barrels a day in 2016, down from 9.2 million barrels a day in 2015.
