OPEC maintains forecasts before key meeting

Just weeks ahead of a key meeting of the oil cartel on June 2, OPEC kept forecasts for global oil supply and demand unchanged in its latest monthly assessment.

Members of the Organization of Petroleum Exporting Countries pumped 32.44 million barrels per day in April, 188,200 barrels a day higher than the previous month, the industry cartel’s Monthly Oil Market Report (MOMR) for May 2016 showed.

This was 380,000 barrels per day short of the 32.8 mbpd demand forecast for the third quarter of this year, indicating that there may be a slight easing of the glut that has marked the oil market over the past year.

A rise in output from Iran, combined with a similarly large increase from Iraq, more than offset the production lost from strike activity in Kuwait and outages in Nigeria.

Saudi Arabia’s crude production increased by 37,600 bpd in April 2016 compared to the previous month, reaching 10.2 mbpd.

However, Saudi demand is also increasing, fueled by utility and industrial requirements.

Saudi demand in March 2016 increased by 0.3 mbpd year-on-year, or around 17 percent.

Meanwhile, non-OPEC oil producers are expected to lower their supply by 740,000 barrels per day in 2016, to an average of 56.40 mbpd, less than previously forecast.

US oil output is expected to contract by 430,000 bpd while the rest of the declines are likely to come from China, Mexico, the United Kingdom, Kazakhstan and Colombia due to lower investments and production delays.

OPEC expects global oil demand to increase by 1.2 mbpd over the full year 2016, unchanged from its last monthly assessment. Demand for OPEC crude is projected at 31.5 mbpd, broadly unchanged from April’s forecast.

Write to Brinda Darasha at brinda.d@argaamplus.com