OPEC forecasts strong global appetite for crude oil in 2018 but now sees output from the United States and elsewhere growing more than previously expected.
The 14-member oil cartel’s latest read on supply and demand comes just two weeks after it agreed to extend output limits with Russia and nine other producer nations. The two dozen producers are capping production to shrink huge global stockpiles of oil that have weighed on prices for more than three years.
The higher supply from outside OPEC could make it harder to achieve that aim, even as OPEC’s production fell in November.
The producer group on Wednesday forecast that non-OPEC production will grow by nearly 1 million barrels a day in 2018. That marks an upward revision of 120,000 barrels a day from its previous projection.
“Higher-than-expected supply growth in the U.S., Canada and Kazakhstan have been the key contributors to the upward revisions, particularly U.S. tight oil,” OPEC said in a monthly report.
U.S oil production has recovered to about 9.7 million barrels a day after hitting a recent bottom of 8.5 million barrels a day in September 2016. The recovery is being driven by growth from U.S. shale fields, also known as tight oil, where producers use advanced drilling methods to extract oil and gas from rock formations.
OPEC hiked its forecast for U.S. output growth in 2018 by 180,000 barrels a day to 1.05 million barrels a day.
“The momentum seen this year is expected to continue in 2018 on the back of increased investment in U.S. tight oil and improved well efficiency,” OPEC said.
OPEC also raised its forecast for non-OPEC output in 2017 by 150,000 barrels a day to 810,000 barrels a day.
The group stuck to its bullish forecast for growing oil demand next year. It sees demand growing by 1.53 million barrels per day in 2018, up slightly from last month’s forecast.
In November, OPEC’s total oil output fell by 133,000 barrels a day to 32.45 million barrels a day, according to independent sources cited in the group’s monthly report.