OPEC said Monday it expects demand for oil to grow faster than it originally expected in 2018, but the organization also sees supplies from beyond the producer group surging this year, driven by rising U.S. output.
A monthly report also showed OPEC's production was little changed in January as the group continues to limit its output for a second year in order to balance an oversupplied market. However, key members like Iraq raised their output in January.
The 14-member cartel said it now sees non-OPEC production growing by 1.4 million barrels per day, up 250,000 bpd from its estimate in its last monthly report. It expects nations outside OPEC to pump a total of 59.26 million bpd this year, 320,000 bpd higher than its last forecast.
The United States accounts for more than half of that upward revision. OPEC raised its 2018 U.S. supply growth forecast by 150,000 barrels per day.
Recent U.S. government data showed that American drillers began pumping more than 10 million barrels of crude oil daily in November, more than top OPEC producer Saudi Arabia.
"According to the most recent assessment, the steady oil price recovery since summer 2017 and renewed interest in growth opportunities has led to oil majors catching up in terms of exploration activity this year, both in the shale industry and offshore deep water," OPEC said.
On the demand side, OPEC said it now expects the world's appetite for oil to grow by 1.59 million barrels a day, up 60,000 bpd from last month's forecast. That would put total global oil consumption at 98.6 million bpd in 2018.
The drivers behind OPEC's forecast include steadily rising economic activity around the world, strong demand for transportation fuels like gasoline and jet fuel and a growing petrochemical industry, which turns byproducts from oil and natural gas into chemicals.
OPEC's latest reading for 2017 put worldwide demand at 97 million barrels a day, up 1.6 million bpd from the previous year.
"Cumulatively, between 2015 and 2017, the world has added around 5 mb/d of demand for oil products on the back of healthy economic conditions globally and a relatively steady product price environment," OPEC said.
OPEC's total production dipped by about 8,000 barrels a day in January to just over 32.3 million bpd, according to independent sources OPEC cites in the monthly report.
The group's second biggest producer, Iraq, tacked on about 30,000 barrel a day, while Libya added roughly 21,000 barrels a day.
Saudi Arabia also increased its output by just over 23,000 million barrels, but continues to provide the lion's share of output cuts.
OPEC, along with Russia and several other producer nations, is keeping 1.8 million barrels a day off the market through the end of the year in order to shrink global stockpiles of oil.
In December, global stockpiles were about 109 million barrels above the five-year average, which is OPEC's target.
"In line with the existing overhang, the market is only expected to return to balance towards the end of this year," OPEC said Monday.