The International Energy Agency believes that the overall non-OPEC production, not just in the US, will soon be on the rise again, although the oil market will likely tighten throughout the year.
“Even after taking into account production cut pledges from the 11 non-OPEC countries, unplanned outages in Canada as well as in the North Sea, we expect production will grow again on a year-on-year basis by May,” said the Oil Market Report of the International Energy Agency (IEA), released April 13.
For the full year, the IEA sees growth of 485,000 barrels per day compared to a decline of 790,000 barrels per day in 2016.
“The main impetus comes from the US, where monthly data shows that output reached 9 million barrels per day in March, up from a trough of 8.6 million barrels per day in September 2016,” said the IEA. “We now expect that US production will be 680 kb/d higher at the end of the year than it was at the end of 2016, an upgrade to our previous forecast.”
In December 2016, OPEC and non-OPEC producers reached their first deal since 2001 to curtail oil output jointly and ease a global glut after more than two years of low prices.
Non-OPEC producers such as Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan, and South Sudan agreed to reduce output by 558,000 barrels per day starting from Jan. 1, 2017 for six months, extendable for another six months.
OPEC agreed to slash the output by 1.2 million barrels per day from Jan. 1, with top exporter Saudi Arabia cutting as much as 486,000 barrels per day.