The Organization of the Petroleum Exporting Countries (OPEC) said U.S. oil production "has shown signs of slowing," and it projects that the total amount of oil produced outside the 13-nation cartel in 2016 will grow by only 160,000 b/d, due in part to production slowing in the United States.
In the latest issue of its Monthly Oil Market Report, released Monday, OPEC projects oil produced outside the cartel will average 57.6 million b/d in 2016 -- a decline of 110,000 b/d from the 57.7 million b/d estimate it made in August. It cited a reduction in U.S. production carried over from 2015, as well as Brazil's lower estimate of its own production, as the two primary reasons for the change.
OPEC said U.S. tight oil production for 2016 was revised downward by about 100,000 b/d due to a carryover of lower historical production during the first half of 2015. The cartel said that was reflected in last month's report by the Energy Information Administration (EIA), which asserted that oil and gas production from seven of the largest unconventional plays in the United States was in decline (see Shale Daily, Aug. 11).
Slowing U.S. oil production could stabilize and possibly raise world crude oil prices, OPEC said; "however, it remains to be seen to what extent this can be achieved in the months to come."
According to OPEC, which cited data from the U.S. Department of Energy (DOE), total U.S. oil production is projected to grow by 220,000 b/d in 2016, averaging nearly 14.0 million b/d for the year. That figure includes 4.3 million b/d of tight crude; 1.7 million b/d from the offshore Gulf of Mexico; 3.4 million b/d of other crude; 2.1 million b/d of unconventional natural gas liquids (NGL); 1.2 million b/d of other NGLs, and 1.2 million b/d of biofuels and other liquids.
OPEC said the current price environment for oil would cause U.S. tight oil production to grow by only 50,000 b/d between 2015 and 2016. By comparison, U.S. tight oil production was forecast to grow by 450,000 b/d between 2014 and 2015.
World crude oil prices will also hinge on the global economy, OPEC said, with worldwide gross domestic product (GDP) expected to rise a modest 3.4% in 2016. By comparison, GDP for the 34 nations that comprise the Organisation for Economic Co-operation and Development (OECD) is projected to increase 2.1% in 2016, and the U.S. is to grow 2.5%.
"While upside potential remains, the many uncertainties in the global economy in the current and next year have skewed the growth risk slightly to the downside," OPEC said. "Nevertheless, global oil demand growth, benefiting also from low oil prices has strengthened since the initial forecast, which may continue for the remainder of the year."