Saudi Arabia told OPEC it raised oil production to a record as the organization forecast stronger demand for its members’ crude in 2016.
The world’s biggest oil exporter pumped 10.564 million barrels a day in June, exceeding a previous record set in 1980, according to data the kingdom submitted to the Organization of Petroleum Exporting Countries. The group expects demand for its crude to rise in 2016 compared with this year as supply elsewhere falters and consumption growth quickens.
OPEC said it expects global oil markets to rebalance as diminished output from rival producers such as U.S. shale drillers whittles away a glut. The strategy is taking time to have an impact, with crude prices remaining 46 percent below year-ago levels and annual U.S. production forecast to reach a 45-year high.
“An improvement towards a more balanced market” is likely in 2016 as consumption grows faster than supply, OPEC’s Vienna- based research department said Monday in its monthly market report. “Momentum in the global economy, especially in the emerging markets, would contribute further to oil demand growth in the coming year.”
Brent crude futures fell 1.8 percent to $57.70 a barrel at 10:51 a.m. local time on the London-based ICE Futures Europe exchange, extending a 2.6 percent loss last week.
Demand for OPEC’s crude will climb next year by 900,000 barrels a day to average 30.1 million a day, according to the report. That’s still about 1.2 million less than the group estimated it pumped in June. Global markets remain “massively oversupplied,” the International Energy Agency said on July 13.
OPEC’s 12 members raised production by 283,200 barrels a day to a three-year high of 31.378 million a day last month, according to external estimates of output cited by the report. This data included a lower estimate for Saudi production of 10.235 million barrels a day.
There was no total available for data submitted directly by OPEC members, because of omissions by Algeria, Libya and Venezuela.
Global oil demand will accelerate next year, to 1.34 million barrels a day, compared with 1.28 million in 2015, led by rising consumption in emerging economies, according to the report. Supply growth outside OPEC will slow to 300,000 barrels a day in 2016 from 860,000 a day this year with the gain concentrated in the U.S.
The IEA estimated demand would grow more slowly next year, with consumption expanding by 1.2 million barrels a day compared with 1.4 million in 2015, according to its monthly report July 10. The Paris-based adviser forecast no growth in non-OPEC supply next year.
World oil demand will average 93.9 million barrels a day in 2016, while non-OPEC supply will total 57.7 million barrels a day, according to the OPEC report.
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