OPEC raised its forecast for oil supplies from non-OPEC members in 2018 as rising prices encourage US oil companies to pump more crude, weakening the impact of an OPEC-led deal to knock back supplies and a major collapse in Venezuela’s output.
The Organization of the Petroleum Exporting Countries (OPEC) said in its monthly report on Thursday that non-OPEC producers will boost production by 1.15 million bpd this year, up from 990,000 bpd in previous forecasts.
“The rise in oil prices brings more supply to the market, especially in North America, especially the tight oil,” OPEC said in the report, referring to another name for rock oil.
Opec, Russia and a number of outside producers began cutting supplies a year ago in order to get rid of the rough supply of crude accumulated since 2014. They extended the deal until the end of 2018.
OPEC’s forecast of rising rival supplies may raise controversy over the effectiveness of continued cuts in production. A ministerial oversight committee will meet early next week in Oman and is expected to discuss the exit strategy from the deal.
But in contrast to those forecasts, the report showed that OPEC’s commitment to production cuts remained high in December and Venezuela’s oil production fell significantly this month.
Oil prices rose after the report was released to trade above $ 69 a barrel near its highest level since December 2014.
Reuters calculations, based on OPEC data, showed OPEC’s commitment to production targets rose to 129 percent from 121 percent in November.
Venezuela’s oil output is falling because of an economic crisis. Venezuela has told OPEC that its oil production fell by 216,000 barrels per day to 1.621 million bpd in December, believed to be the lowest in decades.
