OPEC economists raised their forecast for U.S. crude oil production, but it's a mixed blessing as it adds to the supply-side pressures that can push oil prices lower. File photo by Gary C. Caskey/UPI | License Photo
Feb. 12 (UPI) -- Economists at the Organization of Petroleum Exporting Countries said they expected more oil from non-member states, with the United States leading the pack.
OPEC in its monthly market report for February raised its forecast for supply from producers outside the group by 250,000 barrels per day for an expected full-year average of 1.4 million barrels per day. Most of those new barrels will come from the United States.
OPEC economists attributed the increase in U.S. oil production to steady gains in the price of crude oil since the middle of last year. That's triggered more work in exploration and production, not only in the U.S. shale oil sector, but also in the deep U.S. waters in the Gulf of Mexico.
By the second half of the year, OPEC said it expected total U.S. oil production to slow down or even stall. Nevertheless, OPEC economists raised the growth forecast from the United States by 150,000 barrels per day. Last year, more than 80 percent of the production growth from the United States came from shale oil deposits in the Lower 48.
At more than 10 million barrels per day, the United States is now rivaling Saudi Arabia, the de facto leader of OPEC, in terms of production.
OPEC's upward revision to U.S. oil production comes at a time when traders and investors are watching global economic momentum and global stockpiles of crude oil and petroleum products. OPEC, with help from Russia, is in its second year of coordinated production cuts aimed at drawing on the surplus on the five-year average for inventories.
Supply-side pressures have undermined some of the effort, particularly the gains in U.S. oil production, a situation compounded by higher export levels.
"Most recently, oil futures posted a sixth straight day of losses, pressured by the turmoil in global equity markets sparked by inflation fears and stronger-than-expected U.S. supply figures," OPEC's report read.
By Friday, crude oil prices had wiped out all of the gains made so far in the year. The price for Brent crude oil, the global benchmark, was rallying early Monday toward $64 per barrel, more than $2 below where it started the year.
On the demand side, OPEC economists said general improvements in the global economy suggest net gains from the United States are less than the total expected world appetite.
"In 2018, world oil demand is foreseen to reach 98.60 million barrels per day, representing growth of 1.59 million barrels per day, 60,000 barrels per dya higher than the previous month's projections and mainly reflecting the positive economic outlook," the report read.