Since the management of Organisation of Oil Export Countries, OPEC, could not rally its members to cut down excess oil production, a new report says it expects rival countries to bit down supply for price to stabilize. According to the latest monthly report from the group, non-OPEC oil supply is forecast to decline by 700,000 barrels a day (b/d) in 2016 — 40,000 b/ d less than the cartel’s January report. Non-OPEC producers, such as those in the U.S., have struggled to break even with the lower oil price and have cut costs drastically. OPEC too said that its downward revision to the non-OPEC supply forecast was “mainly due to announced capex cuts by international oil companies, the fall in active drilling rigs in the U.S. and Canada, and a heavy annual decline in older fields.” Oil prices remain very low, with a barrel currently fetching around the $30-mark on the back of a glut and lagging demand. OPEC has refused to cut its own output and thereby support prices, however, even as lower prices hurt government budgets in OPEC member countries in the Middle East and beyond. Signaling that the imbalance in supply and demand was not set to be rectified anytime soon, OPEC said on Wednesday that it expected world oil demand to grow by 1.25 mb/d in 2016, “representing a marginal lower adjustment of 10,000 b/d from the previous forecast, to average 94.21 mb/d.” That forecast for oil demand follows a similar prediction from the International Energy Agency (IEA) on Tuesday. It too forecast that global oil demand growth would “ease back significantly” in 2016 from the five-year high of 1.6 million barrels a day (mb/d) in 2015 to 1.2 mb/d in 2016. It said demand growth would be “pulled down by notable slowdowns in Europe, China and the U.S.” At the same time as the global oil demand forecast was lowered, OPEC forecast that its own supply had increased in January, with crude production up 131,000 barrels a day to average 32.33 mb/d, according to secondary sources, above its official output ceiling of 30 mb/d. Even as low oil prices start to hit home with even Saudi Arabia reporting a record budget deficit in 2015 and spending cuts to cope with lower oil revenues, OPEC has refused to budge on output and has been optimistic on the outlook for global oil demand.
Thank's for reading my article Falling oil price: OPEC puts hope in rival countries
Created at 2016-02-11

0 Rate upStar
Share: