Receive $80 Grab vouchers valid for use on all Grab services except GrabHitch and GrabShuttle when you subscribe to BT All-Digital at only $0.99*/month.
Find out more at btsub.sg/promo
[LONDON] Opec on Thursday sharply raised its forecast for oil supply from non-member countries in 2017 as higher prices encourage US shale drillers to pump more, hampering the producer group's efforts to clear a glut and support prices by cutting output.
In a monthly report, the Organization of the Petroleum Exporting Countries said outside producers would boost supply by 950,000 barrels per day (bpd) this year, up from 580,000 bpd expected previously.
As a result, Opec cut the forecast 2017 demand for its crude by 300,000 bpd.
The 13-country Opec is curbing its output by about 1.2 million bpd from Jan 1 for six months, the first reduction in eight years. Russia and 10 other non-Opec producers agreed to cut half as much.
The report will add to a debate about the effectiveness of the cut, which is expected to be extended when producers meet later this month. While oil prices have gained support, higher rival supply is limiting further gains and an inventory glut has proved slow to shift.
"US oil and gas companies have already stepped up activities in 2017," Opec said in the report. "US tight crude output is expected to rise rapidly and increase by 600,000 bpd in 2017," Opec said, using another term for shale.
Oil prices pared gains on Thursday after the release of the report to trade at less than US$51 a barrel, below the US$60 level that top Opec producer Saudi Arabia would like to see.
Prices are still up from about US$48 a year ago.
In the report, Opec pointed to continued high compliance by its members with the supply deal and said oil stocks in industrialised nations fell in March - although they are still 276 million barrels above the five-year average.
Supply from the 11 Opec members with production targets under the accord - all except Libya and Nigeria - fell to 29.674 million bpd last month, according to figures from secondary sources that Opec uses to monitor output.
That means Opec has complied 111 per cent with the plan, according to a Reuters calculation, up from an estimate in March of 104 per cent. Opec did not publish a compliance number.
Opec said its production, including Nigeria and Libya, fell by about 18,000 bpd in April to 31.73 million bpd, according to the secondary sources.
Saudi Arabia increased output by about 50,000 bpd, according to the secondary sources and Saudi figures, although Riyadh continues to produce less than agreed under the deal.
Some of the larger Opec producers told the organisation that their output was higher than the secondary-source figures, meaning compliance is lower if these numbers are used.
The United Arab Emirates reported a 15,000-bpd increase in its output to 2.988 million bpd - more than its Opec target of 2.874 million bpd. Iraq said it pumped 4.53 million bpd, above its target of 4.351 million bpd.
Due to the higher supply expected from outside producers, Opec trimmed forecast demand for its crude in 2017 to 31.92 million bpd, down 300,000 bpd from the previous forecast and not far from current production.
Any more supply from Opec or non-Opec could return the market to surplus. However, officials from member countries have questioned the sustainability of the rebound in shale.
Opec and the non-Opec producers also cutting output meet on May 25 and are expected to extend the supply cut at least into the second half of the year.