OPEC raised Monday its estimate for non-OPEC oil supply this year but stuck by its forecast of a 700,000 b/d year-on-year supply contraction after revising its 2015 figures.
In 2016, non-OPEC oil supply is forecast to shrink to 56.39 million b/d, OPEC said, a 110,000 b/d upward revision from its previous monthly estimate.
Citing updated production data for Q4, OPEC said its estimate for non-OPEC oil supply growth for 2015 was also raised by 110,000 b/d to 1.42 million b/d for an average of 57.09 million b/d.
The impact of widespread industry spending cuts are being offset by falling costs, causing the non-OPEC supply forecast in 2016 to become "more uncertain," OPEC said.
"On the one hand, the oil market has witnessed lower capital expenditure on the part of IOCs, as well as a decline in the US rig count, higher output from legacy wells than new tight oil wells and increased geopolitical tension. On the other hand, 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 stopping production," OPEC said.
OPEC also revised down its estimate for US liquids production this year by 20,000 b/d from its previous report. In 2016, US total liquids output is now expected to decline by 420,000 b/d to average 13.57 million b/d, with the fall coming primarily from a "drop in tight crude production in different regions of the US."
After rising 910,000 b/d last year, OECD Americas' oil supply is expected to see the biggest regional decline this year globally at 480,000 b/d, OPEC said.
"The oil production outlook for this region in 2016 remains uncertain due to the high break-even costs, which are estimated to be higher than current oil prices in most areas of the US and Canada as well as Mexico," OPEC said.
