The Organization of the Petroleum Exporting Countries (OPEC) said Thursday that it expects oil production by countries outside the cartel to fall in 2016 by more than it previously forecasted, in a sign that its audacious strategy may be working at last. In its latest monthly report, OPEC said the 2016 oil supply from outside the group will decline by 380,000 barrels per day to average 57.14 million per day.
The previous forecast from OPEC, which pumps around a third of the world's crude oil, was for a drop of 130,000 barrels per day for countries outside the 13-country group.
Oil prices have plunged by more than 60 percent in the past 18 months due to a global supply glut and a weaker Chinese economy, with Brent crude falling under $40 this week for the first time since 2009.
In the past, OPEC has responded to price falls by curbing production. But this time - most recently at a meeting in Vienna last Friday - it has opted to keep the taps open. Driven by cartel kingpin Saudi Arabia, this strategy is aimed at maintaining market share and squeezing out U.S. producers of shale oil, whose output has boomed in recent years but which need a higher oil price to make money.
The new December monthly report suggested, however, that its ploy may be taking longer than expected to bite, with the cartel obliged to increase its forecast for 2015 non-OPEC production.
After the "tremendous" growth of 2.23 million barrels per day in 2014, the cartel now expects growth in 2015 to have been a "much slower" 1.0 million -- but up from its previous projection of 280,000 barrels.
The biggest expected drop in 2016 -- of 110,000 barrels -- will come from the United States, but the new report also showed that production from non-OPEC Russia hit post-Soviet records in October and November. It added, however, that while the share of OPEC crude in global supply has fallen since 2008, in the first 11 months of 2015 it inched up 0.4 percentage points to 32.9 percent. World oil demand is anticipated to have risen 1.53 million barrels per day in 2015 to average 92.88 million, it said. For 2016 OPEC expects an increase of 1.25 million barrels per day, unchanged from last month's forecast, to 94.13 million.
OPEC's oil production on rise in November
The crude oil production in the Organization of the Petroleum Exporting Countries (OPEC) surged by 230,000 barrels on a daily basis, reaching 31.7 million barrels in November.
According to OPEC's "Oil Market Report" for November, crude oil production rose the most in Iraq, Angola and Kuwait in November, while it dropped in Libya, Nigeria and Saudi Arabia. Iraq's crude oil production increased by 250,000 barrels on a daily average and reached 4.3 million barrels in November. Crude oil production reached 1.8 million and 2.7 million barrels in Angola and Kuwait, respectively in the same month. Meanwhile, oil production in Libya, Nigeria and Saudi Arabia dropped to 405,000, 1.9 million and 10.1 million barrels on a daily average, respectively. These figures corresponded to crude oil production of 31.695 million barrels in OPEC countries on a daily average in November.
Global oil supply soared 370,000 barrels in November compared to the previous month and reached 95.6 million barrels. The report suggests that this stemmed from the rise in oil supply of OPEC counties and other countries. OPEC had a share of 33.2 percent in global oil production in November.
According to the report, global oil demand is expected to increase 1.53 million barrels on a daily average and reach 92.88 million barrels compared to last year. This figure will surge to 94.13 million barrels with a 1.25 million barrels increase on a daily average. This year crude oil demand from OPEC will see a 400,000 barrel increase on a daily average compared to last year and reach 29.4 million barrels. This demand will rise 1.5 million barrels on a daily average and reach 30.8 million barrels next year.
In last Friday's meeting, OPEC did not announce a top production limit on the daily 30 million barrels of oil unlike in previous meetings. Instead, it said that member countries would continue their de facto production levels, whereupon oil prices entered a rapid downward trend and dropped to its lowest level in the past seven years on Wednesday.
