IEA sees collapse in 2016 US oil output
The International Energy Agency (IEA) says it expects low oil prices to force the US to cut output by the steepest rate in more than two decades next year.
The IEA in a report has warned that the production of other non-OPEC producers could also be reduced.
The agency said global oil demand was poised to climb to a five-year high this year thanks to lower prices, adding that production cuts by the US and others could help rebalance an oversupplied market.
Reuters has described IEA’s report as one of the most bullish for OPEC since the group shocked markets last year by deciding against cutting production, choosing to fight for market share and depress the output of higher-cost producers such as the United States.
"The big story this month is one of tightening supply, with the spotlight firmly fixed on non-OPEC," the IEA said in its monthly report.
"Oil's price collapse is closing down high-cost production from Eagle Ford in Texas to Russia and the North Sea, which may result in the loss next year of half a million barrels a day - the biggest decline in 24 years."
The projected drop in output would be the largest since 1992, when non-OPEC supply contracted by 1 million barrels per day (bpd) from the previous year, with the collapse of the former Soviet Union, Reuters said.
The IEA further emphasized that it expects the world demand for oil to rise within the next few months.
As a result, the world would need much more crude from OPEC, it said. The agency estimated that the group would need to pump around 31.3 million bpd in 2016 - 0.5 million bpd more than the forecast in the previous IEA report - to balance the market.
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