Underlining the current glut, OPEC said the market is in the midst of only the second period in a decade when inventories in developed economies have exceeded the five-year average by more than an “excessive” level of 150 million barrels. OPEC previous year abandoned a longstanding policy of propping up prices and instead raised output, seeking to recover market share taken by higher-cost rival production.
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The group is still banking on a recovery in prices next year, however, citing strategic oil reserves in countries such as China and India taking advantage of the current price climate. “We see global oil demand maintaining its recent healthy growth”, he said, adding, “We see less non-OPEC supply”. In last month’s STEO, non-OPEC production was forecast to increase 100,000 BPD in 2016, Kallanish Energy reports. Year 2009 OPEC implemented record production cuts; this time the group has signaled it won’t pare supplies to balance the global market. “The physical oil market is falling apart just as we are hitting the winter, when it’s all supposed to be getting better”.
Oil demand was projected to grow in 2016, according to a monthly report released by the Organization for Petroleum Exporting Countries, CNBC reported Thursday. Oil prices have fallen as a result from around $114 last June to below $50 a barrel.
The November report was the last to be published ahead of the cartel’s meeting in Vienna on 4 December, where its position on production going forward will be decided. The kingdom’s output often declines after summer as domestic fuel demand for power generation eases.
“Globally, almost 5 mb/d of projects have been deferred or canceled due to the current low price environment…The impact of capex cuts in different regions of the world and the decreased tight oil output in the United States are the main reasons for negative growth in the next year”, the report stated.
OPEC said in a monthly report that, the 12-country producer group kept its forecast for world oil demand growth in 2015, predicting it will rise by 1.5 million barrels per day (mb/d) to average 92.86 mb/d, unchanged from the previous month’s forecast.
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The cartel expected non-OPEC oil supply to contract by 0.13m barrels per day to 57.11 mb/d in 2016.
