OPEC expects the oversupply of oil to ease in the coming months with demand picking up due to higher consumption in the developed markets. The group continues to predict US output will decline by the end of 2015.
"The projections for market fundamentals indicate that the current oversupply in the market is likely to ease over the coming quarters," OPEC said in its report released Wednesday.
The surplus on world markets will shrink to 440,000 barrels per day in the second half of 2015 if OPEC continues pumping at last month’s rate, the report said.
OPEC expects oil demand in 2015 unchanged at 1.18 million barrels a day and sees demand for its own oil to remain at 29.3 million barrels a day this year which is 300,000 barrels higher than in 2014.
The US will struggle to maintain output at current levels in the second half of this year, according to OPEC’s report. The oil rig count in the US fell to 642 units in the first week of June, marking 26 weeks of straight declines. The number of active oil rigs has fallen by around 60 percent from an October high of 1,609. Lower oil prices drove up demand for transportation fuels as Americans buy more gas guzzling sport-utility vehicles.
The increase in non-OPEC crude oil output is expected to remain unchanged at 680,000 barrels a day this year while supply will decline in the second half of the year, compared to an increase in the first half.
The OPEC group of 12 countries said it produced 30.98 million barrels a day in May which is the highest level since September 2012 and a nearly 4 percent increase since May 2014. Saudi Arabia and Iraq accounted for over three-quarters of that growth. Iraq pumped 3.8 million barrels a day in May while Saudi Arabia 10.3 million barrels a day. On Tuesday Saudi Arabia claimed its higher production was designed to meet increased global demand and not to compensate for lower prices.
Last week, the cartel decided to keep its output quota unchanged at 30 million bpd. Its decision not to reduce output in November despite the price collapse sent prices temporarily below $50 a barrel.
Brent futures for July were up 60 cents trading at $65.48 a barrel at 19:00 MSK. West Texas Intermediate (WTI) was up 77 cents at $60.91 a barrel.