OPEC has cut predictions for the amount of oil its members will need to pump this year after rising US output saw the group predict a supply buffer ahead of summer demand peaks.
The Organization of Petroleum Exporting Countries, responsible for 40% of the world’s oil supply, said it expects the 12 member countries will need to produce an average of 29.6million barrels a day of crude this year, according to its monthly market report.
The figure represents a 100,000 barrels a day drop compared to last month’s forecasts, after increased output from the USA and Canada.
Increased output from shale formations in North Dakota and Texas has seen reliance on OPEC being eroded, with the organisation warning it expects currently narrow oil inventories to be rebuilt over the next few months.
“Demand for OPEC crude for 2014 was revised down” from last month “reflecting the upward adjustment of non-OPEC supply,” the group’s Vienna-based secretariat said in the report.
“Oil markets have now entered into a period of lower demand, which provides the opportunity to re-build tight product inventories.”
OPEC’s 12 members reduced production by 626,200 barrels a day to 29.6 million a day in March because of declines in Iraq, Angola and Libya, according to secondary sources cited by the report.
Iraqi production fell most, declining 288,400 barrels a day to 3.2 million a day, according to the report, which didn’t specify a reason.
The second-largest drop was in Angola, where output fell by 154,800 barrels a day to 1.5 million a day, followed by Libya, where supplies slipped by 117,700 a day to 243,000 a day. Saudi Arabia, the group’s biggest member, trimmed output by 80,500 barrels a day to 9.7 million a day.
The group boosted its projection of supplies from outside OPEC by 60,000 barrels a day. Non-OPEC producers, led by the U.S., Canada and Brazil, will increase output by 1.4 million barrels a day in 2014 to 55.6 million a day.
The organization kept its forecast for global oil demand in 2014 stable. World consumption will increase by 1.1 million barrels a day, or 1.3 percent, to 91.2 million a day, the report indicated.
OPEC’s 12 members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the U.A.E. and Venezuela. The group will next meet on June 11 in Vienna to discuss output targets.
The International Energy Agency, the Paris-based adviser to oil-consuming nations, will release its monthly report with forecasts of supply and demand tomorrow.
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