LONDON: OPEC`s oil output has surged in March, the producer group said in a report, adding to excess supply in the market despite more evidence that its strategy of letting prices fall to hurt other producers is taking effect.
In a monthly report on Thursday, OPEC said demand for its oil this year would be 80,000 barrels per day (bpd) higher than previously thought as lower prices curb supplies in the United States and other non-member countries.
But the report also confirmed industry estimates of a surge in OPEC production in March, which jumped by 810,000 bpd led by higher output in Saudi Arabia and Iraq and a partial recovery in Libyan production.
OPEC refused to cut its output in 2014 despite a price collapse, seeking to slow higher-cost production in the United States and elsewhere that had been encouraged by OPEC`s previous policy of keeping prices high at around $100 a barrel.
The group now forecasts demand for its oil will average 29.27 million barrels per day (bpd) in 2015. It expects rival non-OPEC supply to rise by only 680,000 bpd, a downward revision of about 160,000 bpd.
"The main factors for the lower growth prediction in this monthly report are still low oil price expectations, the declining number of active rigs in North America, the decrease in drilling permits in the U.S. and the reduction in (international oil companies`) 2015 capex," OPEC said in the report.
OPEC, which pumps a third of the world`s oil, is more than filling the gap. According to secondary sources cited by the report, the group pumped 30.79 million bpd in March, an increase of 810,000 bpd from February.
If OPEC keeps pumping at the same rate, the report indicates there will be an excess supply of 1.52 million bpd in 2015 and 2.78 million bpd in the first half - much more than the surplus expected last month.
Crude inventories in the United States have ballooned to record highs, but OPEC expressed confidence that these would be eroded by higher seasonal crude demand as well as lower output.
"Given expectations for lower U.S. crude oil production in the second half of the year, these higher refinery needs will be partially met by crude oil stocks, reducing the current overhang in inventories," OPEC said.
