LONDON

Opec on Thursday sharply raised its forecast for oil supply from non-member countries in 2017 as higher prices encourage US shale drillers to pump more, hampering Opec efforts to clear a glut and support prices by cutting its output.

In a monthly report, the Organisation of the Petroleum Exporting Countries revised up its estimate of oil supply growth from producers outside the group this year to 950,000 barrels per day (bpd), up from a previous forecast of 580,000 bpd.

Opec is curbing its output by about 1.2 million barrels per day (bpd) from January 1 for six months, the first reduction in eight years, to clear excess supply. Russia and 10 other non-Opec producers agreed to cut half as much.

The report will add to a debate about the effectiveness of the supply cut pact, which is expected to be extended when producers meet later this month. While oil prices have gained support, higher rival supply is limiting further gains and an inventory glut has proved slow to shift.

“US oil and gas companies have already stepped up activities in 2017,” Opec said in the report. “US tight crude output is expected to rise rapidly and increase by 600,000 bpd in 2017,” Opec said, using anther term for shale.

Oil prices pared gains on Thursday after the report was released to trade below $51 a barrel, below the $60 level that top Opec producer Saudi Arabia would like to see.

Prices are still up from about $48 a year ago.

In the report, Opec pointed to continued high compliance by its members with the supply cut deal and said oil stocks in industrialised nations fell in March — although they are still 276 million barrels above the five-year average.

Supply from the 11 Opec members with production targets under the accord — all except Libya and Nigeria — fell to 29.674 million bpd last month, according to figures from secondary sources that Opec uses to monitor output.

That means Opec has complied 111 per cent with the plan, according to a Reuters calculation, up from an estimate in March of 104 per cent. Opec did not publish a compliance number.

Oil prices rose on Thursday, with benchmark Brent crude trading comfortably above $50 a barrel after a fall in US inventories and a bigger-than-expected cut in Saudi supplies to Asia helped tightened the market.

Oil producers in consensus to extend cuts, Opec members say

Baghdad, Arbil, Dubai

Opec and other oil producers taking part in output cuts have reached a consensus to extend the limits until the end of the year, oil ministers for two of the group’s members said.

All members of the Organisation of Petroleum Exporting Countries support an extension of the cuts for a second six-month period, as do non-member nations that joined last year’s accord to curtail a global oversupply of crude, Iraq’s Jabbar Al-Luaibi and Algeria’s Noureddine Boutarfa said Thursday in a joint news conference in Baghdad.

“The decision to decrease output will be for six months, and Algeria and Iraq maintain a united stand for the next cuts,” said Boutarfa, who hosted the Opec meeting in September 2016 where the cuts were first agreed in principle. Iraq is Opec’s second-biggest producer.

Opec will decide formally whether to extend the cuts when its ministers meet in Vienna on May 25. The producer group and other major suppliers including Russia agreed last year to cut their collective production by about 1.8 million barrels a day for the first half of 2017 in an effort to reduce bloated global stockpiles and rebalance the market. The agreement included a provision to extend the cuts for a further six months if necessary, subject to a unanimous decision.

The two biggest producers participating in the cuts, Opec’s Saudi Arabia and non-member Russia, both signalled willingness on May 8 to extend the deal. Saudi Arabia’s Energy Minister Khalid Al-Falih said he was “confident the agreement will be extended into the second half of the year and possibly beyond,” in comments at a conference in Kuala Lumpur.

— Bloomberg