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1st LD Writethru: OPEC forecasts higher U.S. tight oil output in 2017

Xinhua, April 12, 2017 Adjust font size:

U.S. tight oil production is expected to increase quickly in 2017, as the country is pumping more oil when OPEC is trying to rebalance the market, OPEC Monthly report showed on Wednesday.

The Organization of the Petroleum Exporting Countries(OPEC) said that U.S. total liquids production in 2017 is forecast to grow by 0.54 million barrels per day, higher than last month forecast, due to the possible quick increase of tight oil output in the U.S.

"U.S. tight crude output is expected to rise quickly and increase 335 tb/d for the overall of 2017," the report said, as the main component of U.S. oil output -- tight oil -- is forecast to grow by at least 0.34 million bpd in 2017.

In the last meeting in Vienna 2016, OPEC decided to cut its oil production by 1.2 million barrels per day to rebalance the oil market. The joint oil production cut would last for six months, which was then the first reduction in eight years for OPEC. Russia and 10 other non-OPEC producers agreed to cut half as much.

However, in the meantime, the U.S., another big oil producer, is pumping more oil.

"It can be expected that any move towards higher prices will likely lead to resurgence in US tight oil production from the major shale regions," the report said.

U.S. didn't join the oil output reduction. The rise of the U.S. oil output could be one big challenge of the oil cartel. The non-OPEC producers oil output is also expected to grow in 2017.

"The number of drilling rigs and the reactivation of companies' spending are the two most important factors leading to an expected output surge in the coming months," the report noted.

OPEC produced 31.93 million bpd last month, lower than its output ceiling set by last meeting.

OPEC secondary sources showed Saudi Arabia output rose in March to 9.994 million bpd, which is under the output cut target. But this is compensated by the output decline of other member states.

Saudi Arabia is the largest producer of OPEC.

OPEC member states are set to meet on May 25 to discuss if it is needed to extend the supply cut deal for another 6 months. Endit