OPEC predicts ‘improved oil market’ in 2016

The Organisation of the Petroleum Exporting Countries (OPEC) has predicted that the oil market should be more balanced next year as China and the developing world use more oil.

Making this known on Monday in its monthly report released on Monday, OPEC said it expected world oil demand to increase by 1.34 million barrels per day (bpd) in 2016, up from growth of 1.28 million bpd this year.

“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”, it said in the report.

“This would imply an improvement towards a more balanced market while supply of fuel from North American shale grows more slowly.”

The 12-member organisation disclosed that it increased production sharply over the last year as Saudi Arabia and other core producers in the Middle East Gulf made attempts to build market share, leading to higher inventories worldwide.

OPEC also disclosed that Saudi Arabia had reported that it pumped 10.56 million bpd last month, up from 231,000 bpd from May, which is a record highest production.

It added that 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.

According to OPEC, US oil output, which has seen rapid increases over the last five years due to the development of shale oil, is expected to log much more modest supply growth in 2016.

“Total U.S. liquids production is expected to grow by 330,000 bpd, just one third of the growth of 930,000 bpd expected this year, which should mean more demand for OPEC oil next year.”

OPEC said it expected demand for its own crude to rise by 860,000 bpd in 2016 to 30.07 million bpd. But it cut its estimate of demand for its crude this year by 100,000 bpd to 29.21 million bpd.

The group said it estimated that its own collective crude output rose by 283,000 bpd to 31.38 million bpd in June, based on figures from secondary sources, led by Iraq, Saudi Arabia and Nigeria.