Oil cartel OPEC has cut its forecasts for how much its rival producers will produce in in 2016, while the 12-member group continues to ramp up its own production levels.
According to the latest monthly report from the group, whose de facto leader is Saudi Arabia, non-OPEC oil supply is forecast to decline by 700,000 barrels a day (b/d) in 2016 — 40,000 b/d less than the cartel’s January report.
Non-OPEC producers, such as those in the U.S., have struggled to break even with the lower oil price and have cut costs drastically. OPEC too said that its downward revision to the non-OPEC supply forecast was “mainly due to announced capex cuts by international oil companies, the fall in active drilling rigs in the U.S. and Canada, and a heavy annual decline in older fields.”
Oil prices remain very low, with a barrel currently fetching around the $30-mark on the back of a glut and lagging demand. OPEC has refused to cut its own output and thereby support prices, however, even as lower prices hurt government budgets in OPEC member countries in the Middle East and beyond.