Dec 10 2013

North American Oil supply to continue to pressure OPEC in 2014

Tuesday, Dec 10, 2013

LONDON--Rising oil supply from outside OPEC, particularly North America, is set to continue to outpace growth in demand next year, the Organization of the Petroleum Exporting Countries said Tuesday, underscoring the pressure the group faces to curtail its own production.

In its monthly market report, the group of oil producers raised its forecast for non-OPEC oil supply growth this year by 15,000 barrels a day to 1.2 million barrels a day, a growth rate it expects will be sustained in 2014.

The rise in non-OPEC production will lead to a decline in demand for OPEC's own oil of 300,000 barrels a day as new supply outpaces demand growth of 1 million barrels a day next year, the report said.

For the better part of a year, OPEC members have been weighing the impact on the market of increasing North American output. However, at the group's biannual meeting in Vienna earlier this month, members decided to maintain a production ceiling of 30 million barrels a day, despite surging supply in non-OPEC countries.

"In taking this decision, member countries re-confirmed their readiness to promptly respond to unforeseen developments that could have an adverse impact on an orderly and balanced oil market," OPEC said in its monthly report.

Since September, OPEC has produced less than its 30 million barrel-a-day output ceiling, as a result of political turmoil in Libya that has halted the majority of the country's oil exports, maintenance work on Iraq's export infrastructure and monthly cuts to Saudi Arabia's output. In November, OPEC's production fell by 193,000 barrels a day to 29.63 million barrels a day, the report said.

However, Iraq has ambitious plans to ramp up its exports next year and Libya also hopes to return its barrels to the market. A thaw in relations between Iran and Western powers could also see some sanctions relief for the country in the second half of 2014. This potential influx in supply could lead to some heated wrangling at the next OPEC meeting in June.

Write to Sarah Kent at sarah.kent@wsj.com; Twitter: @sarahkentDJ

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* OPEC Production Fell by 193,000 B/D to 29.6M B/D in November

Tuesday, Dec 10, 2013

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© Copyright Zawya. All Rights Reserved.

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