Opec scales back 2016 oil forecast

An oil drilling pump site in McKenzie County outside of Williston, North Dakota. - Reuters

The Organisation of the Petroleum Exporting Countries, or Opec, on Monday trimmed its forecast for global oil demand next year as emerging markets, which have been the motor of world growth in recent years, splutter.
Cheap oil prices should be enough to keep oil demand growing slightly in volume terms next year, but also nearly halt the expansion of non-Opec resources, the oil group said in its monthly report.
Better-than-expected growth in the United States and the eurozone prompted the Opec Countries to nudge up its forecast for world oil demand growth this year to 1.46 million barrels per day to 92.79 million bpd.
Oil demand was stronger than it had forecast in the main consuming countries "mainly driven by lower oil prices".
However, the Opec cut its 2016 forecast to a 1.29 million bpd gain to 94.08 million bpd "due to the projected slower economic momentum in Latin America and China".
The slowdown in China, which has dampened the prospects for commodities producers and sparked volatility in markets in recent weeks, led the Opec to trim its forecast for global economic growth to 3.1 per cent this year and 3.4 per cent in 2016. "While the group of emerging and developing economies has been the main growth engine in recent years, it has become clear that growth in this group is slowing down," the Opec said.
Low oil prices were also beginning to have an impact on production, it said.
"US oil production has shown signs of slowing," the Opec said. "This could contribute to a reduction in the imbalance of oil market fundamentals, however, it remains to be seen to what extent this can be achieved in the months to come," it said.
However, the Opec still sees a marginal increase of US oil production to 13.97 mbpd next year from 13.75 mbpd, with output from shale producers also to nudge up if prices hold at current levels.
That contrasts with a forecast made last week by the International Energy Agency, which analyses energy markets for oil consuming nations, that non-Opec oil output may drop by half a million barrels per day next year - the biggest decline in 24 years - with US shale producers accounting for four-fifths of that drop.
Iran sees oil at $42-$50
Meanwhile, Iran has projected average oil prices at $42 to $50 per barrel in a draft budget bill for the year to March 2017, a government spokesman was quoted as saying on Monday, expecting crude to stay in the current trading range.
"In consultation with the Ministry of Petroleum, three price options of $42, $45 and $50 were discussed which are expected to earn 68 trillion tomans [about $22.5 billion]," oil news agency Shana quoted Mohammad-Baqer Nobakht as saying.
Benchmark Brent crude has traded between $42 and $55 in the last month, and was just below $48 on Monday morning.
Opec member Iran, which relies on crude sales to balance its budget, has called on other producers to rein in exports to support prices while it expects to boost output in 2016 when nuclear-related sanctions are expected to be lifted.
"Although oil prices have fallen, we hope that with the financial assets that will be unblocked, the public's purchasing power can increase," Nobakht said.