The outlook for US shale oil is slightly more “optimistic” due to rising prices and output will recover further in the second half of 2021, OPEC said, in a sign its policy of cutting output is helping rivals pump more.
U.S. shale producers are not part of a pact between OPEC nations and others including Russia - the so-called OPEC+ - to reduce their output to support prices and reduce oversupply.
U.S. total oil supply will rise by 370,000 barrels per day (bpd) in 2021 to 17.99 million bpd, the Organization of the Petroleum Exporting Countries said in a monthly report, up 71,000 bpd from the previous forecast.
A significant rebound in shale could hamper efforts by OPEC and its allies to support the market. Oil prices hit an 11-month high above $57 a barrel this week, supported by OPEC+ supply restraint and a voluntary cut by Saudi Arabia.
“The 2021 supply outlook is now slightly more optimistic for U.S. shale with oil prices increasing, and output is expected to recover more in the second half of 2021,” OPEC said.
Also in the report, OPEC left its forecast for world demand unchanged, saying oil use will rise by 5.90 million bpd this year to 95.91 million bpd, following a record 9.75 million bpd contraction last year due to the pandemic.
OPEC said there was upside potential in its forecast of 4.4% economic growth in 2021, but new coronavirus variants, rising infections and a slow start to vaccination programmes may cloud the recovery at least for the first quarter.
“While a strong global economic recovery in 2021 remains very likely, the depth and magnitude of this year’s rebound remains uncertain,” OPEC said.
