OPEC raises forecasts for non-OPEC oil production on shale

Latest report from Organisation Petroleum Exporting Countries (OPEC) estimates that rival supplies will outgrows that of OPEC mostly from US shale fields as global oil market are likely to balance out by the end of 2018.
OPEC said production particularly from US shale fields presented “considerable uncertainties” for the oil market.
In its latest monthly oil market report, non-OPEC oil supply growth for 2017 now stands at 810,000 barrels per day (bpd), an upward revision of 150,000 bpd from prior forecasts. However the cartel report showed its strategy is paying off, having reduced the oil-inventory surplus in developed nations to about 137 million barrels as of October, compared with about 380 million barrels before the cuts began.
Oil prices climbed to a two-year high above $65 a barrel on Monday which was reinforced by a temporary Forties pipeline halt in the U.K. and the November 30 decision by OPEC and non OPEC joint decision to curbs supply until the end of next year.
“The market is a function of demand and supply, demand for OPEC oil is still always high apart from maybe Saudi Arabia and Venezuela who deal with hard oil. OPEC countries should not focus on US shale rather they should see this as an opportunity to build up reserves and develop assets to its advantage.” said Luqman Agboola, Head of Energy and Infrastructure, Sofidam Capital.
He further added, “Competitively, production costs in OPEC is always lower compared to US shale, irrespective of the technology USA use in extracting conventional oil.”
Russia in its last meeting with OPEC in Vienna pushed for guidance on when a winding down of supply curbs will take place, as oil companies in the country expressed concern about US shale producers taking advantage of a price rebound in 2017. Saudi Arabia a major OPEC player has said it is “premature” to discuss an exit strategy as global inventories still remain above their five year average, meaning producers still had more work to do to ease bloated stockpiles.
”Russia is one of the highest energy producer in the world, so they will rather focus there than compete in oil production, they were only forced to do so before because Saudi Arabia didn’t curtail despite agreeing to do so,” added Luqman Agboola.
The report also showed crude from OPEC members will stand at 33.2m bpd in 2018, which is higher than levels seen in 2017 and slightly higher than what the cartel expects demand for its crude to stand at next year as November production stood at almost 32.5m bpd.
Nigeria has seen its production capped by OPEC at 1.8 million bpd due to improved security of oil infrastructure in the Niger Delta region which has boosted production in the last 18 months.
On Friday, oil company Total said its new Egina field offshore Nigeria was on track to start in 2018, adding 10 per cent to the country’s production. The field will have a capacity of 200,000 barrels per day (bpd) and launch in the fourth quarter of 2018, counterbalancing production constrained by aging pipelines, perpetual theft and sabotage.
Non-OPEC oil producers will pump around 990,000 barrels of crude per day more next year than this year as US shale oil producers ramp up output, the report predicted. Global oil demand is projected to grow at 1.5m bpd in 2017, in line with last month’s forecast, and by a similar level next year.

 

OLADIPO OLADEHINDE