KUWAIT CITY: Organization of the Petroleum Exporting Countries (OPEC) is confident that the oil market will be “more balanced” next year as non-OPEC production has contracted and global demand is increasing, the cartel’s secretary general Abdullah el-Badri said on Sunday.
“OPEC is confident that it will see a more balanced market in 2016,” Badri told an oil and gas conference in Kuwait City.
“In recent months, there has been a contraction in production from non-OPEC producers and an increase in global demand,” he said.
However, Badri also admitted that the “market remains oversupplied”, and insisted that stability is paramount to the crude market which faced “extremely challenging times.”
The OPEC chief said market fundamentals did not support the sharp drop in oil prices which have fallen by almost 60 percent since June 2014.
Badri said that global demand for oil is forecast to rise to 110 million barrels per day by 2040 from 93 million bpd now.
“This requires investments of $10 trillion between now and then,” he said.
Earlier Sunday, Qatar’s Energy Ministry Mohammed bin Saleh al-Sada, who is acting OPEC president, said there were signs of an oil price rise next year, adding that the oil price has “bottomed out.”
He said world GDP growth in 2016 is slated to be 3.4 percent as against an expected 3.1 percent in 2015, and that this would result in an increase in global oil demand by 1.3 to 1.5
Growth in supplies from non-OPEC producers over the past five years has substantially reduced in 2015 and is likely to show zero to negative growth in 2016, the statement said.
Venezuela—which has been trying hard to persuade oil producers to cut output to boost prices—said Thursday a technical meeting of OPEC and other crude-producing countries would take place on October 21.
Badri on Sunday confirmed the meeting would take place at an expert level and that OPEC and non-OPEC producers will attend.
He said the cartel was ready to cooperate with non-OPEC producers to deal with the market glut if they show a similar desire.
There were no specific recommendations or proposals for the technical meeting, Badri said, but “it will be a discussion to find a solution” for the oil market.
Badri said OPEC believes the current problem in the oil market has been created by all producers, but especially by non-OPEC states which raised their production sharply.
“Non-OPEC increased their output by 6.0 million barrels per day in the past six years, and OPEC believes this is the reason for the glut in the oil market,” he said.
On Friday, oil edged up in New York and slipped in London as traders booked profits from the week’s rally fuelled by hopes for oversupply relief from lower US crude production. AFP