The Organisation of Petroleum Exporting Countries (OPEC) has changed its forecast for crude oil supply in 2017, predicting an increase in oil production rather than the previously foreseen decline, outside the cartel.
This comes as the latest sign that the global glut is here to say, analysts are saying, and is mostly a result of the start-up of the Kashagan oil field in Kazakhstan.
“Non-OPEC oil supply in 2016 is now expected to contract by 0.61 million barrels per day (bpd), following an upward revision of 0.18 million bpd. (…) This has been mainly due to a lower-than-expected decline in US tight oil and a better-than-expected performance in Norway, as well as the early start-up of the Kashagan field in Kazakhstan,” the report reads.
Oil Supply Glut Here to Stay, Says OPEC
Production from outside the OPEC is set to rise by 200,000 bpd in 2017, despite forecasting a drop of 150,000 bpd only a month ago.
According to the OPEC report, demand for crude will average 32.48 million bpd next year, down 530,000 bpd from the previous forecast.
OPEC’s latest meeting in Doha
This prospect brings added concern to the challenge that OPEC and non-members like Russia will face when trying to cut supplies.
“It is expected that there will be higher non-OPEC production in the second half of 2016, compared to the first half of 2016, stemming from oil sands production that was shut down due to wildfires in Canada, as well as a continued rise in US rig counts, the end of seasonal maintenance and the start-up of new projects,” the report states further.
Record OPEC Output Raises Concerns
Within the Organisation, output neared a multi-year high in August, at 33.24 million bpd, and down by 23,000 from July’s figure, which was the highest since at least 2008.
This means that OPEC’s total output of 33.24 million bpd in August was 757,000 bpd higher than the average amount the world will need from the Organisation next year, the report explains further.
This high level of production within OPEC as well as an increase in supply from outside OPEC is expected to make it harder for the Organisation and Russia to successfully implement any measures to support the market.