Growing demand for crude oil and slower supply growth next year should help rebalance the global oil market, OPEC said Monday. Consumption in China and the developing world will recover while supplies of North American shale oil will grow more slowly, the cartel said in its monthly report.
OPEC said it expects world oil demand to grow by 1.34 million barrels per day in 2016, up from growth of 1.28 million barrels this year. The surge would outpace the growth of oil supplies from non-OPEC producers, including the United States, amid rising demand for OPEC crude oil.
“This would imply an improvement towards a more balanced market,” OPEC economists said in a report cited by Reuters.
Tepid demand for crude oil over the past year, together with the surge in U.S. and OPEC supplies, has helped drive oil prices down below $60 a barrel this summer, from above $100 a barrel last year. Brent crude, a global benchmark, was trading at $57.51 a barrel Monday morning, while U.S. benchmark crude was just under $52 a barrel.
OPEC’s demand growth forecast is more optimistic than the International Energy Agency’s own projections. The Paris watchdog group said Friday that it expects global oil demand growth to slow to 1.2 million barrels per day in 2016, down from an average of 1.4 million barrels in 2015.
Still, Saudi Arabia-led OPEC said it expected demand for its own supplies would grow more slowly this year than previously anticipated -- rising by 100,000 barrels per day to 29.21 million barrels by the end of 2015.
The OPEC report suggests prices may recover slightly next year as low oil prices force producers to postpone drilling and exploration projects. OPEC said it expects oil supplies from non-OPEC producers to grow by only 300,000 barrels per day in 2016, down from growth of 860,000 barrels per day.
The International Energy Agency agreed in its report, explaining that non-OPEC supply growth could “grind to a halt in 2016 as lower oil prices and spending cuts take a toll.”