OPEC says global oil glut to persist till 2017 - media
Crude supply from non-OPEC producers will continue growing for another two years, according to an OPEC draft report seen by Reuters. Increased production, mainly shale in North America, is a ‘turning point’ in the restructuring of global markets, it said.
"Since June 2014, oil prices have experienced a significant reduction, reaching levels even lower than the crisis experienced in 2008, yet non-OPEC supply is still showing some growth," OPEC’s long-term strategy report says, Reuters reported on Thursday. Supply from rival non-OPEC producers will grow at least till 2017, the document said.
The OPEC report comes ahead of the group’s landmark meeting in Vienna on June 5 where it’s expected to make a decision on production quotas.
READ MORE: US oil production growth at record 100-yr high in 2014 - EIA
"Recent structural changes in the growth patterns of non-OPEC supply as a result of the substantial contributions from North American shale plays might prove to be a turning point,” the report said.
It’s the first time in almost 25 years that non-OPEC oil supply has received such optimistic forecasts. Even a severe low price environment won’t result in production cuts for non-OPEC supply and high-cost producers will always seek to cover a part of their operating costs, the report states.
New and cheaper technologies for the extraction of tight crude, shale gas, and oil sands will guarantee aggregate growth at six percent per year and contribute 45 percent of the growth in energy production to 2035, according to the report.
A global oil glut and weak demand could lead to OPEC's crude fall from 30 million barrels per day (bpd) in 2014 to 28.7 million in 2019. The group’s output currently stands at 31 billion bpd. Demand for OPEC’s oil will start rising only after 2018-2019, reaching almost 40 million bpd by 2040, the report said.
The world’s largest oil producing organization, OPEC refused to cut its output in November despite the price collapse, aiming to recover its market share.
Oil prices, almost halved from last year’s $115 a barrel, have rallied strongly to around $68 per barrel since the beginning of 2015.
Brent futures for July were up 28 cents at $62.34 a barrel by 14:47 MSK on Thursday. US West Texas Intermediate (WTI) crude rose 10 cents to $57.61.
