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World Oil Supply

40

OPEC Monthly Oil Market Report – August 2017

lower output in the Gulf of Mexico following seasonal maintenance and predominantly lower-than-expected

tight crude produced in shale regions. In Canada, the loss of around 0.4 mb/d of Syncrude in Mildred

upgrader following the wildfires was the reason for a downward adjustment, which partially carried over to

the upcoming quarters. In developing countries (DCs), according to the latest estimates, by the end of July

compared to the previous month, there was no remarkable revisions in this group. In opposite of OECD, in

the FSU – only in Russia following an upward revision of 0.15 mb/d in 2Q17, the annual growth revised up by

38 tb/d. In China, oil supply was also revised up by 0.01 mb/d, following the upward revision by 31 tb/d in

2Q17.

Graph 5 - 1: Revisions in annual changes of 2017* for selected countries

During month of July, Brent crude oil rallied by 4.5%, or $2.09 to average $48.51/b compare to June 2017, its

biggest monthly gain this year. Projections for next year also expect prices to improve. The voluntary

production adjustments outlined by the Declaration of Cooperation continued to impact supply, while

OPEC members have decided to a deeper production adjustment as well as limitations on exports.

Moreover, the US shale output is showing some signs of slowing down and the most important reason for the

price increasing is the drawdowns in US crude oil inventories which in the last week of July saw the biggest

draw yet, with more than 7.2 mb taken out of storage.

Graph 5 - 2: Annual supply changes for selected countries in 2017*

The main factors for higher growth expectations in 2017 compared to last year are the current improving

price environment, start-up of giant projects such as Kashagan, the increasing number of active rigs in

North America and the proportionally remarkable investment in upstream projects. Nevertheless, non-OPEC

supply is predicted to show mild growth of 0.15 mb/d in 2H17 compare to 1H17. This market development

suggests that more possibilities being ready for market rebalancing in the 1H18.

-0.07

-0.05

-0.03

0.02

0.03

0.03

0.03

0.04

-0.08

-0.06

-0.04

-0.02

0.00

0.02

0.04

US

Canada

Colombia

China

Brazil

Russia

Norway

Indonesia

mb/d

Note: * 2017 = Forecast.

Source: OPEC Secretariat.

-0.17

-0.12

-0.06

-0.06

-0.04

0.07

0.14

0.17

0.24

0.70

-0.3 -0.2 -0.1 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8

Mexico

China

Colombia

Azerbaijan

Oman

Ghana

Kazakhstan

Canada

Brazil

US

mb/d

Note: * 2017 = Forecast.

Source: OPEC Secretariat.

Non-OPEC supply

growth 2017/16

0.78 mb/d