OPEC Forecasts Lower U.S. Production
The Organization of Petroleum Exporting Countries (OPEC), which supplies about one-third of the world’s crude, released its September oil market report. OPEC has raised its forecast for 2015 global demand growth to 1.46 million barrels a day, up from 1.34 million in 2014. Demand in 2016 is now forecast at 94.08 million barrels a day, an increase of 1.29 million barrels a day over 2015 levels.
Despite moderate economic growth, recent data shows better-than-expected oil-demand in the main consuming countries. This is mainly driven by lower oil prices. At the same time, US oil production has shown signs of slowing. This could contribute to a reduction in the imbalance of oil market fundamentals, however, it remains to be seen to what extent this can be achieved in the months to come.
“There are signs that U.S. production has started to respond to reduced investment and activity,” OPEC said in the report. “Indeed, all eyes are on how quickly U.S. production falls.” Despite the expected fall in US production, OPEC says America’s oil supply will be higher than any other non-OPEC country’s output in 2015.
West Texas Intermediate (WTI) crude futures have tumbled more than 50 percent in the past year, triggering an unprecedented cutback in drilling that threatens to end the nation’s shale-oil boom. Prices have collapsed as OPEC follows Saudi Arabia’s strategy of defending its share of the global market against shale and other competitors. WTI traded near $45 a barrel on Monday.
In June the top first and second suppliers to the US maintained the same order as seen last month. Canada remained the premier crude supplier to the US, accounting for 41% of total US crude imports, as the volume increased by 104 tb/d from a month earlier. Saudi Arabia remained the second largest supplier to the US, though with lower volumes of 131 tb/d, or 11%, from last month. Mexico was the third top supplier, accounting for 11% of total US crude imports and with higher exports to the US than a month earlier, up by 198 tb/d or 34%.
Crude imports from OPEC Member Countries declined in June from one month before by 190 tb/d or 7%. Imports from OPEC Member Countries accounted for 37% of total US crude imports. This decline came mainly as less crude volumes were imported from Saudi Arabia and Venezuela.
The latest OPEC monthly oil-market report can be reached at opec.org