OPEC yesterday said its oil output fell last month and forecast supply from rival producers next year would decline for the first time since 2007 as low prices prompt investment cuts, reducing a global supply glut.
In a monthly report, OPEC said it pumped 31.38 million barrels per day (bpd) last month, down 256,000bpd from September.
If realized, the forecast of a decline in supply outside OPEC would be a further indication the group’s strategy is working. OPEC last year abandoned a longstanding policy of propping up prices and instead raised output, seeking to recover market share taken by higher-cost rival production.
Oil is trading at just under US$46 a barrel, more than 50 percent below its price in June last year.
“The recent decline in oil prices has encouraged additional oil demand,” OPEC said in the report. “It has also provided a challenging market environment for some higher-cost crude oil production, which has already shown a slowdown.”
The group expects non-OPEC supply next year to fall by about 130,000bpd, following growth of 720,000bpd this year, “as nearly US$200 billion of capex cutbacks this year and next create a gaping supply hole.”
OPEC production, which has surged since the policy shift of November last year led by record Saudi Arabian and Iraqi output, fell last month on export delays in Iraq and lower supply from Saudi Arabia and Kuwait, said the report, citing secondary sources.
OPEC’s report points to a 560,000bpd supply surplus in the market next year if the group keeps pumping at last month’s rate, down from 750,000bpd indicated in last month’s report.
In the third quarter of next year, demand for OPEC crude will rise to an average of 31.51 million bpd, OPEC predicted — above current output for the first time in months.
OPEC in the report left its oil demand forecasts for next year unchanged, predicting the world would need 30.82 million bpd of OPEC crude and that global demand would grow by 1.25 million bpd.
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