OPEC sees lower demand for its oil in 2018, points to surplus

 12 Jul 2017 - 15:29

OPEC sees lower demand for its oil in 2018, points to surplus
(file photo / AFP)

By Alex Lawler / Reuters

LONDON: World demand for OPEC’s crude will decline next year as U.S. shale producers and other rivals pump more, OPEC said on Wednesday, suggesting the oil market will see a surplus in 2018 despite an OPEC-led output cut.

In a monthly report, the Organization of the Petroleum Exporting Countries forecast the world will need 32.20 million barrels per day (bpd) of crude from its members next year, down 60,000 bpd from this year as rivals pump more.

OPEC also reported a jump in its June output to levels above the forecast of average global demand for its crude this year and next, hindering efforts to reduce a glut if it persists.  OPEC officials are still upbeat on the outlook.

“We remain very optimistic ... to helping the market to rebalance itself,” OPEC Secretary General Mohammad Barkindo said at an industry conference in Istanbul.

Under the deal to support the market, OPEC is curbing output by about 1.2 million bpd while Russia and other non-OPEC producers are cutting half as much. With the glut slow to shift, producers agreed in May to prolong the accord until March 2018.

OPEC production has increased in recent weeks, in part due to a recovery in supplies from Libya and Nigeria, two members which were exempted from the supply cut as conflict had curbed their output.

In the report, OPEC said its output rose by 393,000 bpd in June to 32.611 million bpd, according to figures from secondary sources OPEC uses to monitor its supply, led by Nigeria and Libya and also due to extra barrels from Saudi Arabia and Iraq.

The OPEC production data means OPEC has complied with 96 percent of the cutback pledge, according to a Reuters calculation, down from more than 100 percent in May but still a high rate by OPEC’s historic standards.

“We are fully satisfied that member countries are maintaining a very high level of conformity,” Barkindo said.

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