OPEC sees more balanced oil market in 2016

Demand growth globally for oil should outpace any oil supply increase from sources that are non-OPEC and the ultra light oils like condensate, increasing the consumption of OPEC crude.

In its July monthly report, OPEC said it expected global oil demand to increase by 1.28 million barrels per day – some 100,000 barrels more than in its June estimates.

Demand for the group’s crude will climb in 2016 by 900,000 barrels a day to average 30.1 million a day, according to the report.

“Better-than-expected momentum in the global economy, especially in the emerging markets, would contribute further to oil demand growth in the coming year”, OPEC said, though it warned many potential problems around the world could weigh on prices next year, including European debt issues, an increase in US interest rates and a possible slowdown in China’s economic growth. Iran is unlikely to export more than an extra 500,000 bpd in the first half of 2016, and an additional 500,000 bpd in the second half of 2016, Commerzbank senior oil analyst Carsten Fritsch told the Reuters Global Oil Forum. Supply growth outside OPEC will slow to 300,000 barrels a day in 2016 from 860,000 a day this year with the gain concentrated in the U.S.

OPEC heavyweight Saudi Arabia exported 7.737 million bpd in April, the latest month for which such data is available. The Paris-based adviser forecast no growth in non-OPEC supply next year. Most of that oil output will come from USA oil fields in Texas and North Dakota.

The oil producing group had increased its production over 2014 as its strongest member, Saudi Arabia and other producers across the Middle East try to build up market share, leading to higher worldwide inventories. Benchmark Brent crude traded around $58.70 a barrel at 1230 GMT on Monday, down from a peak above $115 in June 2014. Opec delegates say it is unlikely that Opec will reverse its policy and cut production then, preferring to wait until after December to assess the impact of additional oil from Iran on the market.