With global oil demand growth forecast to rise in 2017 and non-OPEC supply expected to fall, OPEC said in its latest monthly report on Tuesday that "market conditions will help remove overall excess oil stocks in 2017."
In its July report, the 14-member oil producing group said that oil demand growth for 2017 is expected at 1.2 million barrels a day (mb/d), around 0.3 mb/d above the last ten years' average.
The rise in demand growth would come as rival non-OPEC supply continued to fall into 2017, OPEC said, while demand for crude from its own 14 members (Gabon rejoined the group in July) was expected to rise to average 33.0 mb/d in 2017, representing a gain of 1.1 mb/d over the current year and compared to an expected increase of 1.9 mb/d this year.
"Thus, market conditions will help remove overall excess oil stocks in 2017," OPEC noted, a moot point for oil markets that have seen prices slump over the last few years due to a glut in supply and failure of demand to keep pace.
Non-OPEC producers were hit harder by the price slump than their lower-cost OPEC producers and in fact, OPEC's decision in November 2014 to keep on pumping at record levels despite the glut was seen as a strategy of the group to defend its market share and put pressure on its rivals. The strategy has largely worked in terms of rival non-OPEC producers shutting down rigs but it has also hurt poorer members of OPEC, such as Venezuela and Angola.