OPECs monthly report says world oil supply growth for 2017 had increased by 37,000 barrels a day with growth in demand seen to remain at 1.27 million barrels a day.
The projection is four times higher than in November, when the group announced a production cut to try and re-balance oversupplied world markets. Russian Federation and 10 other non-OPEC producers agreed to cut half as much. Cartel members have indicated an agreement to extend the cuts by another six months is likely. USA crude stockpiles have started to drop and the amount of oil in floating storage is contracting.
On Thursday, OPEC's own monthly oil market report said that production from non-members would rise 64 percent faster than previously forecast this year, driven mainly by US shale fields.
Still, prices won't like rebound quickly because of accelerating production from countries like U.S., Brazil, Canada, and even OPEC members Nigeria and Libya. For a while, the strategy appeared to be working, with prices drifting north of $54 earlier this year.
Inventories have been at all-time highs for the last few years, but Goldman Sachs sees a more modest build of around 6 million barrels this year where we've often seen nearly triple these numbers at this time of year.
That means OPEC has complied 111 percent with the plan, according to a Reuters calculation, up from an estimate in March of 104 percent. The current market is not ideal for producers although as evidenced by the number of companies entering the market it is not almost as dire as OPEC or other parties suggest.
Demand for OPEC crude in 2016 now stands at 31.8 mb/d, which is 2.0 mb/d higher than in the previous year.
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Turkmenistan is a small producer, pumping about 250,000 bpd.
OPEC uses two sets of figures to monitor its output - figures provided by each country, and secondary sources which include industry media.
June natural gas tacked on 1.3% to trade at $3.421 per million British thermal units, up roughly 4.8% for the week. The shale boom will propel non-OPEC output up 1.3 million barrels a day next year, effectively filling up nearly all the expected growth in demand.
Any more supply from OPEC or non-OPEC could return the market to surplus.
At the same time he waived away the signs that the market is still woefully oversupplied, acknowledging the larger-than-expected rebound in United States shale, but still noting that the fundamentals are improving.
OPEC and the non-OPEC producers also cutting output meet on May 25 and are expected to extend the supply cut at least into the second half of the year.
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