‘Balanced oil market in 2016’
Opec predicts supply glut will be whittled away next year
THE GLOBAL oil market should be more balanced next year as China and the developing world increase consumption while supply of shale oil from North America and other regions grows more slowly, the Organisation of the Petroleum Exporting Countries (Opec) said yesterday.
World oil demand is expected to increase by 1.34 million barrels per day (bpd) in 2016, up from growth of 1.28 million bpd this year, Opec’s latest monthly report said.
World oil demand growth should outpace any increase in oil supply from non-Opec sources and ultra-light oils such as condensate, increasing consumption of Opec crude oil, it said.
“This would imply an improvement towards a more balanced market,” Opec’s in-house economists said.
Demand for Opec’s own crude oil is expected to rise by 860 000 bpd in 2016 to 30.07 million bpd.
But the organisation cut its estimate of demand for its crude this year by 100 000 bpd to 29.21 million bpd.
Oil prices are now around half their levels of a year ago with global crude oil benchmark Brent trading at around $58.50 a barrel by 1pm yesterday, down from a peak above $115 in June 2014.
Lower prices have squeezed high-cost oil producers and brought a sharp fall in the number of oil exploration rigs in operation, particularly across North America.
Supply of oil from non-Opec producers was expected to grow by only 300 000 bpd in 2016, down sharply from growth of 860 000 bpd this year.
US oil output, which has seen rapid increases over the past five years thanks to the development of huge shale resources by “fracking”, is expected to log much more modest supply growth in 2016.
“Total US liquids production is expected to grow by 330 000 bpd, just one third of the growth of 930 000 bpd expected this year,” said the Opec report.
World oil supply has grown much faster than demand this year,.
Opec has led the growth as its core members in the Middle East Gulf attempt to build market share, leading to higher inventories.
Saudi Arabia, in particular, has pushed up its oil production to record highs, industry sources say.
Opec estimated, based on figures from secondary sources, that its own group crude oil output rose 283 000 bpd to 31.38 million bpd in June, led by Iraq, Saudi Arabia and Nigeria.
Saudi Arabia reportedly pumped 10.56 million bpd last month, up 231 000 bpd from May. – Reuters
CHINA AND THE DEVELOPING WORLD WILL INCREASE CONSUMPTION WHILE SUPPLY OF SHALE OIL WILL GROW MORE SLOWLY