The Saudi-led oil cartel said daily crude production outside of OPEC is likely to grow by 160,000 barrels next year, a figure 110,000 barrels lower than its estimate last month, largely because US oil production is slipping faster than expected.
In its latest monthly oil market report published Monday, the 12-member oil cartel OPEC said U.S. oil producers are finally beginning to feel the squeeze of lower oil prices.
A slowdown in emerging economies like Brazil, Russian Federation and China could subdue global oil demand growth next year.
OPEC said USA tight oil production for 2016 was revised downward by about 100,000 b/d due to a carryover of lower historical production during the first half of 2015.
The idea of being “energy independent” started after the 1973 oil crisis-when the Organization of Arab Petroleum Exporting Countries (OAPEC) declared an oil embargo and badly damaged the US economy. The group last met this summer in Vienna, when it agreed to leave its production ceiling unchanged at 30 million barrels per day.
West Texas Intermediate crude fell 63 cents to settle at $44 a barrel Monday on the New York Mercantile Exchange.
On the demand side, Opec warned that growth would slow next year. And, while Argus’ independent estimates of Iraqi crude output are all-embracing, those issued by the oil ministry in Baghdad and submitted to Opec are not – they exclude crude produced by foreign oil companies operating in the territory controlled by the Kurdistan Regional Government.
Prices are down over 25pc from this year’s June peak on speculation that a global glut will persist as OPEC members sustain output and United States stockpiles swell. Last Friday the IEA said lower prices of oil would force non-OPEC producers to cut their output by the biggest rate in over two decades during 2016.
To put that into perspective, consider that total OPEC production in August was approximately 31.6 million barrels per day.
Lucky 13?Once Indonesia is back into the fold, OPEC’s membership will be up to 13 nations.
Unless prices recover, non-OPEC output is set to fall in 2016, and the IEA’s forecast 500,000 bpd cut could end up looking conservative.
“In time inventories will clear, setting up for the next medium-term upswing as oil prices begin to rise to incentivise more supply”, a recent note from Paragon said. “This could contribute to a reduction in the imbalance of the oil market fundamentals, however, it remains to be seen to what extent this can be achieved in the months to come”.
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.