OPEC Raises Production Forecasts for 2017

OPEC raised its forecast of oil supplies from non-member countries in 2017 as new fields come online and U.S. shale drillers prove more resilient than expected to cheap crude, pointing to a larger surplus in the market next year.

Demand for crude from the Organization of the Petroleum Exporting Countries will average 32.48 million barrels per day (bpd) in 2017, OPEC said in a monthly report on Monday. That is down from the previous forecast of 33.01 million bpd.

The prospect of a larger surplus than expected adds to the challenge of OPEC and non-members such as Russia, who are making a renewed attempt to restrain supplies. Oil is trading at $47 a barrel, half its level of mid-2014, as a supply glut that OPEC hoped cheap oil would banish sticks around.

OPEC revised up its 2016 and 2017 non-OPEC supply forecasts, citing factors including the start up of Kazakhstan’s Kashagan oilfield and a lower-than-expected decline in U.S. shale output, and said the immediate outlook was for more production.

“It is expected that there will be higher non-OPEC production in the second half of 2016 compared to the first half,” OPEC said in the report.

OPEC expects non-OPEC supply to rise by 200,000 bpd in 2017, versus a previously forecast 150,000 bpd decline. The revision is mostly due to Kashagan, OPEC said, as the long-delayed giant field finally starts up.

On top of that, the forecast for this year was revised up by 180,000 bpd.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza