Oil markets will rebalance on declining non-OPEC production: OPEC
OPEC reported that output from non-OPEC countries will drop by 740,000 barrels per day (bpd) on the year to 56.4 million bpd this year, 10,000 bpd lower than OPEC’s previous predictions. Meanwhile, OPEC expects US production to decline by 431,000 bpd on the year to 13.56 million bpd. Moreover oil companies around the world will cut their average exploration and appraisal investments during 2016, 2017 and 2018 to $40 billion annually, according to OPEC.
The Doha meeting between OPEC and non-OPEC producers ended without a consensus on freezing output at January levels due to Saudi Arabia’s and other Gulf nations’ disagreement upon a freeze deal without the participation of all OPEC members, including Iran. Iran had not agreed to curb its production following removal of sanctions and it boosted output by 198,000 bpd on the month to 3.45 million bpd, OPEC reported. Overall OPEC output was at 32.44 million bpd last month, up 188,000 bpd on the month. Declining non-OPEC production is expected to offset the effect of rising OPEC output. OPEC expects global oil demand to increase by 1.2 million bpd on the year to 94.18 million bpd in 2016.
The International Energy Agency (IEA) also stated on Thursday that the oil inventory overhang is expected to soften to 200,000 bpd in the second half of 2016 compared with 1.3 million bpd in the first half of the year.
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