OPEC says a balanced market is possible, though output is already above a ceiling proposed in Algeria. Photo courtesy of the Organization of Petroleum Exporting Countries.
VIENNA, Nov. 11 (UPI) -- Balance between supply and demand in the oil market will re-emerge with output adjustments, OPEC said, even as production grows in some key regions.
The Organization of Petroleum Exporting Countries said in its monthly market report for November that lower oil prices offered a financial incentive to keep oil in storage. Data from the United States this week show crude oil inventories increased by 2.4 million barrels in the week ending Nov. 4, showing markets still favor the supply side.
"Global oil inventories have grown rapidly since oil prices began to fall in the middle of 2014," OPEC economists said in their monthly report.
A higher level of crude oil production from OPEC and non-member states, including Russia and the United States, helped drag oil prices from above $100 per barrel in 2014 to below $30 per barrel in early 2016.
OPEC members in September tabled a proposal to hold production from its 14 members to 33 million barrels per day at the high end "in order to accelerate the ongoing drawdown of the stock overhang and bring the rebalancing forward." In its monthly market report, the group said adjustments from both OPEC and non-OPEC members would help bring markets back into balance.
Data from OPEC show total U.S. oil production is on pace to decline to 13.6 million barrels per day, a figure revised upward from the previous month's report. With crude oil prices recovering, however, OPEC said there was a double-digit increase in the number of rigs in service in the United States, which could bring production levels up eventually.
OPEC reports total production from its members in October was 33.6 million bpd, about a half percent higher than the previous month and nearly 2 percent above the ceiling proposed in September. World oil demand growth for 2016, meanwhile, was adjusted slightly lower to 1.23 million bpd and the prediction for 2017 was steady at around 1.15 million bpd.
Outside of OPEC, Russian oil production remains higher. In the United States, President-elect Donald Trump has said he'd enact policies that favored more domestic crude oil production.
From its perspective, OPEC said there were "numerous uncertainties" for growth prospects in the global economy for the rest of this year and into 2017.