OPEC said on Tuesday its rivals will produce more oil than expected this year, as it continued backpedaling from its previous skepticism over the significance of a US shale boom. The views of the Organization of the Petroleum Exporting Countries show it is narrowing its differences with oil consumers on the impact of resurgent North American output.
The International Energy Agency, which represents some of the world's most industrialized nations that are major oil consumers, earlier toned down its bullish views on the matter.
In its monthly oil-market report, the producers' group increased its forecast of non-OPEC oil supply for this year by 35,000 barrels a day, after new data showed higher-than-expected output in the US and Canada for the third quarter.
These extra barrels will be absorbed by higher global demand for oil, which POEC said will be growing by 34,000 barrels a day more than predicted its previous forecast.
With the additional demand being met by its rivals, the group said the global need for its own crude will decline by 300,000 barrels a day next year. And despite kingpin producer Saudi Arabia cutting output by about 210,000 barrels a day last month, the group said it still produced about 90,000 barrels a day more than demand for its crude in the third quarter.
In recent months, participants in the global oil market have been grappling with the impact of hydraulic fracturing, known as fracking, which have revolutionized the industry by enabling drilling for difficult-to-reach resources in complex rock formations in places like Texas and North Dakota.
But in its closely watched World Energy Outlook, the Paris-based IEA dismissed speculation that the exploitation of unconventional resources like shale oil could weaken OPEC's role in supplying the world with oil over the long term. That's in marked contrast with the IEA's report last year, which said the US boom will allow America to leapfrog over Saudi Arabia to become the world's largest crude oil producer by 2020.
The agency's latest findings echo OPEC's analysis last week, in its own long-term outlook report, that said the producers' group questioned whether current production rates could be sustained. At the same time, OPEC acknowledged that the US shale oil boom has had a big impact on the oil market after calling such production marginal only two years ago.