OPEC signals decreasing supply surplus this year, but U.S. supply rebound possible
OPEC signaled a falling oil supply surplus in 2017 on Wednesday as the exporter group’s output slips from a record high ahead of a deal to cut supply and outside producers show positive initial signs of complying with the accord.
However, the Organization of the Petroleum Exporting Countries, in a monthly report, also pointed to the possibly of a rebound in U.S. output, as higher oil prices following supply cuts by other producers support increased shale drilling.
OPEC and several independent producers agreed last year to cut supply, the first such deal in 15 years, as of Jan. 1, 2017 to remove a glut. The effort has helped oil prices LCOc1 to rise to $55 a barrel, from a 12-year low near $27 a year ago.
“A continued normalization of monetary policies, indicating improving economic conditions, together with the recent historic cooperation between OPEC and non-OPEC producers, should help to bring needed stability to the oil market,” OPEC said.
“Initial reports show positive signs of compliance with pledged production adjustments,” OPEC added of non-members’ contribution.
OPEC in November finalised a plan to cut its output by about 1.20 million barrels per day (bpd) to 32.50 million bpd. Russia and other non-member countries pledged curbs of around 560,000 bpd in December.
The OPEC figures published on Wednesday showed the group pumped 33.085 million bpd last month, according to figures OPEC collects from secondary sources, down 221,000 bpd from November.
The biggest reduction came from Saudi Arabia, which told OPEC it cut output to 10.47 million bpd. Losses in Nigeria, which is exempt from cutting output because its production has been curbed by conflict, provided the second largest.
