â€¢ Output fell to its lowest in six months
The Organisation of Petroleum Exporting Countries (OPEC) has said supply and demand in the global oil market would likely balance out by the end of 2018 as a result of a pick-up in oil demand, particularly from the transport sector.
This is, however, coming as the cartelâ€™s oil production fell to its lowest in six months but rival United States production was surging faster than expected, thus raising concerns that the market may not rebalance before the end of 2018.
OPEC said in its monthly Oil Market Report released yesterday that oil demand was projected to grow by 1.51 million barrels per day in 2018, compared to an already higher-than-expected 1.26 million increase in 2017.
With the projected increase in demand in 2018, OPEC said global demand would reach 98.45 million barrels per day next year, adding that â€œexpansion in the transportation sector is expected to provide the bulk of oil demand growthâ€.
According to OPEC, expected strong economic expansion across the world will also underpin industrial and construction fuel demand.
The group noted that its crude production fell by about 133,500 barrels a day in November to 32.45 million barrels a day.
OPECâ€™s own crude oil output is likely to edge up to 33.2 mb/d next year from 32.8 this year, a smaller increase than previously thought.
OPEC and some non-members of the cartel, including Russia, last month extended an output cut agreement until the end of 2018 in the hope of re-balancing the oil market and underpinning the price of crude.
However, the output decrease last month was tied to other factors with domestic demand for Saudi oil declining in the winter and Angola and Venezuela facing production issues.
OPEC predicted that non-OPEC oil producers will pump around 990,000 barrels of crude oil per day more next year than this year as US shale oil producers ramp up output.
OPEC, however, said an overhang of global stocks would dwindle next year, â€œarriving at a balanced market by late 2018.â€
Non-OPEC oil supply growth for 2017 now stands at about 810,000 barrels a day, representing an upward revision of around 150,000 barrels a day from the previous OPEC report.
For 2018, the forecast for supply growth outside the cartel was increased by about 120,000 barrels a day to around 990,000 barrels a day.