Demand for OPEC crude next year will be slightly higher than the supply OPEC has pledged, and together with the promised non-OPEC cuts, this is expected to speed up the drawdown of global stockpiles and bring forward the rebalancing of the oil market to the second half of 2017, the cartel said in its Monthly Oil Market Report on Wednesday.
OPEC’s own assessment of the timing of market rebalancing is more pessimistic than the estimates of the International Energy Agency (IEA), which said yesterday that if the cartel and non-cartel producers deliver the production cuts they agreed to over the weekend, the oil market is likely to move into deficit in the first half next year by an estimated 600,000 bpd.
According to OPEC, non-OPEC oil supply is expected to grow next year by 300,000 bpd, despite initial projections in July 2016 for a contraction. The expectation for non-OPEC supply growth is mainly due to higher price expectations for next year, the organization said.
As for U.S. production, OPEC expects companies “to step up activity in 2017 as they start to increase their spending amid a recovery in prices”. Citing consultancy Deloitte, OPEC said that most of the activities would be focused on completion, with very little investment made in exploration.
Referring to world oil demand growth next year, OPEC left its oil demand growth estimate unchanged from last month’s report at 1.15 million bpd, which would lead to an expected total world oil consumption of 95.56 million bpd. Related: U.S. Shale Finally Sees Production Rise
Apart from forward-looking estimates, OPEC reported today the cartel’s crude oil production for November.
Hardly surprising is that OPEC’s total November output – according to secondary sources – increased by 151,000 bpd from October to average 33.87 million bpd. That’s 1.37 million bpd more than OPEC’s pledged production target of 32.5 million bpd effective January. This raises again the question that everyone has been asking since early September: can and will OPEC really do it this time?
Last month, output within OPEC rose the most in Angola, Nigeria and Libya, and dropped the most in Kuwait and Saudi Arabia, OPEC’s secondary sources figures show.
By Tsvetana Paraskova for Oilprice.com
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