OPEC Revises 2017 Forecast: Supply Up, Demand Growth Down

Energy

Published: December 14, 2016 7:55 am

Last Updated: January 12, 2020 4:47 pm

In its Monthly Oil Market Report for November, released Wednesday morning, the Organization of the Petroleum Exporting Countries (OPEC) noted that the cartel’s price for its reference basket fell to $43.22 a barrel (down 10%) last month.

Global demand growth for 2016 increased by 10,000 barrels a day to 1.24 million, or a daily average of 94.41 million barrels. The cartel’s projected demand growth for 2017 remained unchanged at 1.15 million barrels a day to average 95.56 million barrels.

The cartel increased its estimate of non-OPEC production for 2017, forecasting non-OPEC supply will rise by 70,000 barrels a day and average 56.5 million barrels a day for the year.

The cartel said OPEC production in November, as reported by secondary sources, rose by 150,000 barrels a day to a daily average of 33.87 million. The cartel has produced more than 33 million barrels a day in each of the past five months, led by increases in production from Libya, Nigeria and Angola. Iranian production has risen to 3.7 million barrels a day compared with 4.56 million from Iraq and 10.51 million from Saudi Arabia.

The cartel also reiterated its estimate of 2016 demand for OPEC crude of 31.9 million barrels a day in the November report. The cartel now forecasts the demand for OPEC crude at 32.6 million barrels a day in 2017, down by 100,000 barrels since the October report.

OPEC also included a revised forecast for global oil markets in 2017. Non-OPEC supply is projected to fall by 780,000 barrels a day in 2016, led by lower production in the United States, China, Mexico, Columbia and other OECD countries in Europe. For 2017, non-OPEC supply is forecast to rise by 300,000 barrels a day, mainly due to higher price expectations.

In July the cartel had forecast that non-OPEC supply would fall by 110,000 barrels a day in 2017.

Interestingly, OPEC does not expect U.S. production to increase next year. The cartel sees production increases from Brazil (250,000 barrels a day), Kazakhstan (210,000 barrels a day) and Canada (170,000 barrels a day).

Demand for OPEC crude in 2017 is forecast at 32.6 million barrels a day, just 100,000 barrels above the agreed level of production following the cuts that take effect next month. Unlike the International Energy Agency, which said on Tuesday that demand likely would outstrip supply in the first half of next year, OPEC forecasts a rebalancing of the crude market in the second half of the year.

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