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OPEC: Oil slump to dampen supply growth among non-members

Slumping oil prices are expected to dampen the increase in non-OPEC oil supply this year, even as demand is expected to improve marginally, the Organization of the Petroleum Exporting Countries said Thursday.

In its monthly oil market report, the producer group lowered its forecast for the increase in non-OPEC oil supply this year, highlighting the indications that lower prices are already affecting investment in the sector. In the U.S., where oil production has soared in recent years, the producer group has slashed 100,000 barrels a day from its forecast production increase this year.

Meanwhile, it sees slightly stronger demand this year, bolstered by the weaker price environment.

Oil prices CLG5, +3.88% have collapsed in the past six months, tumbling more than 50% since June amid soaring U.S. crude production at a time of slowing world economic growth and sluggish demand. The downturn was exacerbated in November when OPEC decided to maintain market share, rather than acting to curtail output and bolster the market.

The producer group has stuck doggedly to its November decision even as the price of member countries’ main export crashed. The price of the OPEC reference basket slumped to its lowest value since May 2009 in December.

Despite the slump in prices, the group ratcheted up its production to 30.2 million barrels a day in December, largely driven by a substantial increase in Iraq’s oil production, according to secondary sources. That suggests OPEC’s fastest-rising oil producer is seeking to increase output to offset the steep decline in prices.

Msarket Watch
Published on:
January 15, 2015
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