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OPEC Expects Oil Oversupply To Persist In 2017

Offshore oil rig

OPEC revised up on Monday its forecast for non-OPEC oil supply in 2017 by 350,000 barrels per day and now expects producers outside the cartel to supply 56.52 million bpd to the market next year, in a signal that the global glut will persist.

The projected non-OPEC supply next year would be an increase by 200,000 bpd over this year, OPEC said in its Monthly Oil Market Report, the last one before its members and non-cartel partners meet to discuss a potential output freeze in Algiers later this month.

Next year’s non-OPEC supply will be boosted by new production from the early start-up of the Kashagan field in Kazakhstan, the cartel said.

This year, non-OPEC oil supply is now seen to contract by 610,000 bpd, less than previously anticipated, and to average 56.32 million bpd, mostly due to a lower-than-forecast decline in U.S. tight oil supply, better-than-expected Norwegian supply, and the early start-up of the Kashagan field.

Regarding OPEC crude oil output, especially the production levels of Saudi Arabia and Iran which are now closely followed by the market ahead of the meeting later this month, Saudi Arabia’s crude production in August was 10.605 million bpd, according to secondary sources. Saudi Arabia’s direct communication to OPEC put its August output at 10.630 million bpd. Iran’s output is some 3.63 million–3.65 million, OPEC’s primary and secondary-sources figures show. According to secondary sources, total OPEC production dropped by 23,000 bpd from July to 33.237 million bpd in August, the cartel said.

Related: Canada’s Oil Future Has Been Hijacked

Earlier this month, the closely-followed Reuters survey expected OPEC’s crude production to increase by 40,000 bpd in August over July to a record-high in recent times, with Saudi Arabia likely setting a fresh output record.

As far as world oil demand growth is concerned, OPEC revised slightly up its projections for 2016, by some 10,000 bpd from the August monthly report, and expects the demand growth to increase by 1.23 million bpd, with total global demand at 94.27 million bpd. The 2017 world oil demand growth projection was relatively unchanged from OPEC’s previous report, with total global demand forecast at around 95.42 million bpd.

By Tsvetana Paraskova for Oilprice.com

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