OPEC said Monday the current oversupply on world oil markets will ease over the coming quarters due to the "slowing pace" of US crude inventory builds but it maintained both its both global oil demand growth and supply growth estimates for 2016.
In its latest monthly oil market report, OPEC said it expected the call on its crude this year to average 31.6 million b/d, unchanged from its forecast a month ago and representing unchanged year-on-year growth of 1.8 mil b/d.
The group also left its forecasts for 2016 world oil demand and supply broadly unchanged, with year-on-year demand growth of 1.40 million b/d and non-OPEC supply expected to fall by 740,000 b/d from the previous year.
World oil demand is estimated to average 94.18 million b/d this year, with consumption in Asia, led by India anticipated to be the main contributor to oil demand growth.
The report noted US oil demand, mainly supported by rising gasoline requirements, continued to grow, and that the European oil demand outlook for 2016 remains "slightly positive, mainly as a result of improving industrial production and a continuously growing auto market."
OPEC expects non-OPEC oil supply for 2016 to average 56.40 mil b/d a fall of 740,000 b/d from last year, the same as its forecast last month, despite various changes in different regions; it is forecast to contract by "Downward revisions were seen mainly in Canada, Brazil and Colombia. These are offset by upward revisions in the US, the UK, Russia and Azerbaijan," it said.
OPEC said the re-balancing on the market was gradually occurring as seen in the slowing pace of inventory builds in US commercial crude stocks.
"Provided that there is a clearer picture regarding oil supply and demand, the expected improvement in global economic conditions should result in a more balanced oil market toward the end of the year," it said in its latest report.
Using secondary sources, OPEC estimated that output from its 13 members fell by 99,800 b/d to 32.361 million b/d in May from 32.461 million b/d in April as production rises in Kuwait, Iran and Saudi Arabia, were offset by steady falls in Nigeria, Venezuela and Iraq.
The June 2 OPEC meeting in Vienna ended with no agreement to restrict crude oil output, with some OPEC members hinted at a somewhat more limited role for the organization, in which responding to supply shortfalls would be key.
Saudi Arabia has told OPEC it boosted crude output to a 10.27 million b/d in May, up slightly from 10.262 million b/d in April.
The May output figure is the OPEC kingpin's largest production figure since October last year, in line with OPEC's current market share strategy.
However, according to secondary sources, Saudi Arabia's production in May was 10.24 million b/d, up 84,000 b/d from April's 10.157 million b/d.
New Saudi oil minister Khalid al-Falih, who attended his first OPEC meeting in early June, said then that his country was in no hurry to increase its oil output capacity from current levels of 12.5 million b/d.
"We are comfortable with current capacity and don't think we need to look at upping capacity soon," Falih told reporters after the meeting. "We have always said there is no reason for us not to grow. But today we are sitting on a very comfortable spare capacity. We have projects coming in to keep that capacity alive at its current level."
