OPEC Optimistic About Oil Demand Next Year

This would outpace the growth of oil supply from non-Opec sources and ultra-light oils such as condensate, increasing demand for Opec crude oil, it said.

OPEC on Monday revised upward its forecast for global crude oil demand growth for this year and also predicted a further increase for 2016 as the world economy picks up again.

“This would imply an improvement towards a more balanced market”, Opec’s in-house economists said in the report.

The group, which controls roughly a third of world oil supply, said in its latest monthly market report that oil demand in 2015 was now expected to grow by 1.28 million barrels per day (bpd), following an upward revision of 100,000 barrels from its last report. But 2016 will be a tough year for the producer group when global sanctions on Iran are expected to ease, allowing it to boost oil production and exports.

Saudi Arabian crude production is likely to remain at around recent output levels during the summer months on high domestic demand, a Gulf OPEC delegate told Reuters on Tuesday.

OPEC said that supply of oil from producers that are not OPEC members was expected to increase by over 300,000 barrels a day during 2016, down sharply from 860,000 per day in now. This data included a lower figure for Saudi production of 10.235 million barrels a day.

OPEC said despite the massive decline in USA oil rigs over the last 12 months, the share of technologically advanced horizontal drilling rigs grew from 67 percent a year ago to 76 percent last month, suggesting oil companies are sending more machinery to more profitable and production regions in a migration pattern known as high-grading.

OPEC’s more optimistic outlook comes as the 12-member cartel makes good on a plan to carve out more of the global oil market as demand grows.

Brent crude for August fell $1.89 to a low of $56.84 a barrel today before rallying back to around $57.30. But next year, western oil companies are expected to whittle down capital spending 5 percent on oil projects around the world next year, on top of this year’s massive budget cuts, OPEC said.