OPEC sees higher demand for its oil in 2016

The Organization of the Petroleum Exporting Countries will need to ramp up their production by considerably more than was expected next year in order to balance demand and supply, the group said on Monday.

In its Oil Market Report for January, producer countries estimated the so-called ‘call on OPEC’ for 2016 at 31.6m barrels a day, up from the 30.8m bpd they estimated in December.

Vienna-based OPEC also axed its forecast for the rate of growth in supplies from outside the organisation next year.

Non-OPEC supplies were now seen shrinking by 660,000 bpd in 2016, versus a prior forecast for a rate of decrease of 380,000 bpd, albeit from a higher base.

“The revision has been due to stronger declines expected in the US and Canada caused by the lower price environment,” the cartel said in its OMR.

The rate of growth in non-OPEC supplies for 2015 was revised higher from a 1.0m bpd clip to a 1.23m bpd pace.

On the demand side, OPEC said that, "the growth risk is seen skewed to the downside as both emerging and some OECD economies are facing several challenges."

OPEC’s estimate for the level of global crude demand in 2016 was little changed at 92.92m bpd, up from the 92.88 bpd it estimated last month.

Output of crude oil from the cartel's members slipped by 210,000 bpd to average 32.18m bpd, the OMR said citing secondary sources.

Commercial oil stocks in countries belonging to the Organisation for Economic Co-operation and Development slipped to 2,966m barrels, OPEC also said.

That was still approximately 267m barrels above the five-year average, equating to a ‘forward cover’ in terms of the number of days of demand that could be made up for of 63.7 days, versus the 63.5 days that it estimated in December.