OPEC forecast that while non-OPEC supply would grow by 88,000 barrels a day in 2015, following a downward revision of around 72,000 barrels per day, it said, “due to lower-than-expected output in the U.S”, showing that OPEC’s strategy to maintain market share is working well.
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OPEC raised this year’s global oil demand forecast to 92.79 million barrels a day for this year, while reducing next year’s demand to 94.08 million barrels a day. US output of shale oil will fall by nearly 400,000 barrels per day in 2016.
Venezuela President Nicolas Maduro on Monday urged Organization of the Petroleum Exporting Countries (OPEC) to convene a heads of state meeting, adding he would soon present proposals to shore up low oil prices that have slammed the recession-hit nation. (Source: The Wall Street Journal, last accessed September 14, 2015.) Non-OPEC production is steadily declining, most notably the USA, which alternatively vies with Russian Federation and Saudi Arabia for the world’s top oil producer position.
Both key contracts had fallen on Friday, capping weekly losses of about three per cent. Worries about the global oversupply, which has outpaced demand, have pushed crude prices down by more than half since June 2014. Those supply and demand forces could move oil prices higher, but OPEC said it wasn’t sure when.
Figure 4. OPEC and USA crude oil production. This could contribute to a lowering of imbalance of the fundamentals of the oil market yet it still is not certain to what extent this could be achieved in the upcoming months.
OPEC appears to be winning the war against US shale-oil producers, as low oil prices make higher cost operations unprofitable amid rising oil output.
Indonesia produced 840,000 bpd in July, according to the global Energy Agency, and OPEC pumped 31.88 million bpd in July according to a Reuters survey – the highest monthly rate on record from the current 12 members.
Equatorial Guinea and Congo-Brazzaville are expected to slightly increase production, the report says, while supply from the traditional heavy hitters of Nigeria, Angola and Algeria is predicted to either remain flat or decline.
Could This Send Oil Prices to $20? “While the group of emerging and developing economies has been the main growth engine in recent years, it has become clear that growth in this group is slowing down”, the Opec said. The market shrugged off an EIA report last Thursday that showed crude supplies climbed last week as refineries idled units to perform seasonal maintenance.
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“Prices are unable to make much headway as the market expects United States crude stockpiles to expand for the third straight week ahead of the EIA report”, said Bernard Aw, a Singapore-based market strategist at IG Markets.
