(EnergyAsia, August 29 2015, Saturday) — Oil producers outside the Organisation of Petroleum Exporting Countries (OPEC) will continue to raise supply over the next two years despite the pressure of falling prices, the cartel said in its latest monthly report.
Led by the US, non-OPEC members will boost production by 1.68% to 57.46 million b/d this year, and by 0.47% to 57.73 million b/d in 2016, according to OPEC’s August market report. The latest figures represent a slight increase in the group’s July forecast for non-OPEC supply of 57.39 million b/d and 57.69 million b/d for the two respective years.
The report took note of “existing uncertainties” that could impact its forecasts: US tight oil production, a possible change in Russia’s tax regime, Brazil’s financial issues, geopolitics in the Middle East and the impact of budget cuts by international oil companies.
OPEC, which does not forecast its own production, reported that its members’ production rose to a three-year high of 31.5 million b/d in July, due largely to increased output from Iraq, Saudi Arabia and Angola.
Crude prices recovered strongly in late August after hitting their lowest levels since February 2009. On August 24, US WTI traded at a low of US$37.75 a barrel while North Sea Brent touched US$42.23. An active bout of short-covering helped WTI settle at US$45.33 and Brent at US$50.05 at the end of the week on August 28.
Global oil demand growth will remain strong, said OPEC in raising its forecasts to 92.70 million b/d this year and 94.04 million b/d for 2016. In its July report, it had issued a forecast for the world to consume 92.61 million b/d this year and 93.94 million b/d in 2016.
Demand will depend on the state of the world economy, with the sharp slowdown in China adding to Europe’s continuing problems to keep global growth from picking up.
OPEC kept its global economic growth forecast unchanged at 3.2% and 3.5% over the next two years.
“China is expected to further slowdown next year to 6.5% from 6.9% in 2015, while India is forecast to reach 7.7% growth in 2016, compared to 7.5% in 2015. While both Russia and Brazil are facing numerous challenges in both the current year and 2016, they are forecast to move out of recession,” it said.
Despite China’s plummeting currency and stock markets, OPEC has held unchanged its forecast for the country’s oil demand to grow by more than 3% to reach a new high of 11.16 million b/d in 2016. The rest of developing Asia, led by India, will consume 11.90 million b/d, up 2.5% from this year.