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The oil cartel revised up its forecast for supply growth from outside OPEC in 2018 on March 14 and now sees rivals adding barrels to the market at a faster pace than demand will rise.
The oil producers group, which has been cutting output in conjunction with Russia to try and prop up prices, said non-OPEC crude production would now grow by 1.66 million barrels a day (MMbbl/d) this year, a 280,000 bbl/d jump on its same forecast last month.
That compares with global demand growth of 1.6 MMbbl/d, which was only revised marginally higher from last month.
The forecasts from OPEC’s analysts in its monthly report add to signs that the group’s efforts to tighten up oil supplies are faltering as growth from U.S. shale and other rival sources rises, buoyed by a crude price that has held above $60 since the start of the year.
Almost all of the production growth OPEC forecasts comes in North America, led by shale output growth in the U.S., with small additions from Canada.
“For 2018, higher growth is expected on the back of the projected increase in US shale production following a better price environment not only for shale producers, but also for other countries such as Canada, UK, Brazil and China,” OPEC said.
While non-OPEC supply growth is only marginally higher than global demand growth, the addition of 180,000 bbl/d of rising OPEC natural gas liquids output—which are not covered by the group’s supply quotas—suggests the market will not be as tight in 2018 as last year.
That could change, however, if OPEC members’ own output declines, with countries such as Venezuela and Angola currently producing below their target levels under the production deal.
The group’s total output fell by 77,000 bbl last month to 32.2 MMbbl, according to secondary sources like consultants and analysts that tracks members’ output.
OPEC revised down demand for its crude by 200,000 bbl/d to 32.6 MMbbl/d—a number still above current output.
The decline in OPEC production was led by a 52,000 bbl/d fall in Venezuela, which is now pumping less than 1.55 MMbbl/d—or more than 600,000 bbl/d less than two years ago, as the country’s economic crisis continues to hit oil output.
OPEC kingpin Saudi Arabia held production below 10 MMbbl/d for another month, showing little sign of wavering from its commitment to draw down global inventories.
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