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OPEC to confront oil supply from rivals, countering its cuts and Venezuelan production collapse

 

 

By Alex Lawler

LONDON
Petroleumworld 01 18 2018

OPEC raised its forecast for oil supply from non-member countries in 2018 as higher prices encourage U.S. shale drillers to pump more, offsetting an OPEC-led deal to clear a supply glut and a deepening collapse in Venezuelan production.

In a monthly report on Thursday, the Organization of the Petroleum Exporting Countries said outside producers would boost supply by 1.15 million barrels per day (bpd) this year, up from 990,000 bpd expected previously.

“Higher oil prices are bringing more supply to the market, particularly in North America and specifically tight oil,” OPEC said in the report, using another term for shale.

OPEC, Russia and several other non-OPEC producers began to cut supply a year ago to get rid of a global glut of crude that had built up since 2014. They have extended the pact until the end of 2018.

The OPEC forecast of higher rival supply could add to a debate about the effectiveness of keeping the curbs in place. A ministerial monitoring panel meets this weekend in Oman and is expected to discuss the eventual exit strategy from the deal.

But that forecast was balanced by figures in the report showing OPEC's compliance with the supply cuts remained high in December and a further sharp slide in Venezuelan oil output.

Oil prices edged higher after the report was released to trade above $69 a barrel, close to the highest since December 2014.

Adherence by the 11 OPEC members with output targets has risen to 129 percent, according to a Reuters calculation based on OPEC figures, higher than November's level of 121 percent.

Venezuela, whose output is dropping amid an economic crisis, told OPEC its production sank by about 216,000 bpd to 1.621 million bpd in December, believed to be the lowest in decades.

 



Story by Alez Lawler;Editing by Jason Neely from Reuters.

reuters.com 01 18 2017

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