Demand for crude from the Organisation of the Petroleum Exporting Countries will average 32.48 million barrels per day (bpd) in 2017, OPEC said in a monthly report on Monday. That is down from the previous forecast of 33.01 million bpd.
OPEC itself kept output near a multi-year high in August, pumping 33.24 million bpd, according to figures OPEC collects from secondary sources, down 23 000 bpd from July’s figure, the report said. The report expects non-OPEC supply to rise by 200 000 bpd in 2017, versus a previously forecast 150 000 bpd decline.
The prospect of a larger surplus than expected adds to the challenge of OPEC and non-members such as Russia that are making a renewed attempt to restrain supplies. Oil is trading at $47 a barrel, half its level of mid-2014, as a supply glut that OPEC hoped cheap oil would banish sticks around.
OPEC revised up its 2016 and 2017 non-OPEC supply forecasts, citing factors including the start-up of Kazakhstan’s Kashagan oilfield and a lower-than-expected decline in U.S. shale output, and said the immediate outlook was for more production.
OPEC report coincided with statements made by two sources close to the Energy Ministry that Russia’s oil output, the world’s largest, is seen rising 2.2% this year, above expectations, to reach almost a 30-year high of 546-547 million tonnes.
Russia has constantly exceeded forecasts for oil production which has been on a steady rise since 2009 when a slump in oil prices dragged down output. Since then, Russian companies have increased drilling by around 10% per year.
“The output will be 546-547 million tonnes this year: companies are actively drilling and Lukoil is launching new fields,” one source said. Another source confirmed the new expectations.
Energy Minister Alexander Novak told Reuters in July that oil production was expected to reach 542-544 million tonnes this year (10.85-10.90 million barrels per day), up from about 534 million tonnes in 2015.
Russia and Saudi Arabia, the leading global oil producers, earlier this month agreed to work towards a possible freeze in oil output volumes to support oil prices.