Opec uncertain over non-Opec decline

London, 14 March (Argus) — Opec said today that forecasts for non-Opec supply this year have "become more uncertain". Although investments are being deferred because of the lower oil price, "there has been a reduction in production costs, mainly in the US, as well as increased hedging, with producers choosing to produce with losses rather than stop production".

But the latest Monthly Oil Market Report (MOMR) maintains the forecast of a 700,000 b/d fall in non-Opec oil production in 2016, compared with 2015, to 56.39mn b/d. The 56.39mn b/d figure is some 110,000 b/d up on last month's figure because an upward adjustment in the 2015 estimate.

The MOMR holds the forecast for global demand growth unchanged from last month at 1.25mn b/d, to average 94.23mn b/d. But a diffident assessment of the global economy only concludes that providing "some of the existing upside potentials materialise, improving global economic growth can lead to higher oil demand later this year".

Production data supplied to the Opec secretariat by member countries indicate a somewhat larger month-on-month fall in Opec output than Argus estimates. Excluding Indonesia and Libya, which did not submit data to the secretariat, Opec data show a 500,000 b/d fall to 32.4mn b/d, whereas Argus numbers show a fall of around 200,000 b/d.

Member country submissions indicate a 317,000 b/d drop in Iraqi exports — accounted for in large part by the closure of the Iraq-Turkey pipeline mid-month after an explosion. UAE production is put 354,000 b/d lower, because of maintenance at Murban. Saudi Arabia said its production was virtually flat at 10.22mn b/d while Iran said it only produced 15,000 b/d more than in January, despite a full month of exports unhampered by US and EU nuclear-related sanctions.

Opec's forecast for the call on its crude this year is 31.52mn b/d, up by 1.78mn b/d on last year, largely unchanged from the previous MOMR.

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