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OPEC Sees More Oil Supply from Rivals

OPEC Sees More Oil Supply from Rivals

Friday, 19 January, 2018 - 08:45
Trucks unload water to be used in the shale oil and gas extraction fracking process in the Loma Campana Vaca Muerta shale oil and gas drilling site, own by Argentina's state-controlled energy company YPF, in the Patagonian province of Neuquen, Argentina June 22, 2017. REUTERS/Juliana Castilla

OPEC has raised its forecast for oil supply from non-member countries in 2018 as higher prices encourage US shale drillers to pump more, offsetting an OPEC-led deal to clear a supply glut.

In a monthly report on Thursday, the Organization of the Petroleum Exporting Countries said outside producers would boost supply by 1.15 million barrels per day (bpd) this year, up from 990,000 bpd expected previously.

"Higher oil prices are bringing more supply to the market, particularly in North America and specifically tight oil," OPEC said in the report, using another term for shale.

OPEC, Russia and several other non-OPEC producers began to cut supply a year ago to get rid of a global glut of crude that had built up since 2014. They have extended the pact until the end of 2018.

The OPEC forecast of higher rival supply could add to a debate about the effectiveness of keeping the curbs in place. A ministerial monitoring panel meets this weekend in Oman and is expected to discuss the eventual exit strategy from the deal.

But the forecast was balanced by figures in the report showing OPEC's compliance with the supply cuts remained high in December and a further sharp slide in Venezuelan oil output.

Oil prices edged higher after the report was released to trade above $69 a barrel and later steadied. Prices are close to the highest since December 2014.

Adherence by the 11 OPEC members with output targets rose to 129 percent, according to a Reuters calculation based on the OPEC figures, higher than 121 percent in November based on last month's report.

Venezuela, whose output is dropping amid an economic crisis, told OPEC its production sank by about 216,000 bpd to 1.621 million bpd in December, believed to be the lowest in decades.

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