OPEC Wary of US Oil Output Estimates

OPEC said that the U.S. could be this year’s top gainer in oil production among nations outside of the oil cartel, but added that the U.S.’ reliance on shale oil could have negative repercussions on its supply projections.

Of late, oil output from the U.S. Eagle Ford, Bakken, and Permian Basin formations has been very encouraging. As a result, OPEC believes the U.S. should be capable of hitting an average oil production of 10.5 to 10.6 million bpd within the year.

OPEC stressed, however, that U.S. projected oil growth for 2013 could be seriously hampered by the dismal rate at which the volume of shale deposits are sliding down. This and other issues, like harsh weather conditions in the Mexican Gulf, possible technical glitches at refineries, fluctuating crude oil prices, and even a low supply of ethanol could be critical as well.

John Kilduff, founding partner at Again Capital agrees with OPEC’s pronouncements. He is also concerned about U.S. shale resources and its longevity.

Meanwhile, OPEC increased its production forecast for this year in support of oil consumption that is projected to grow by about 840,000 bpd. However, it disclosed that demand for OPEC oil could slip by some 300,000 bpd, or to about 29.8 million.

The publication of OPEC’s monthly report coincided with Citigroup’s release of a commentary about energy.  The bank said that the growing energy supply from U.S. and Iraq could put OPECs future at risk.  The group estimates that, in the long-term, Brent crude oil prices per barrel will cap at $90.

Meanwhile, OPEC said that Canada’s oil production will grow this year by about 18,000 bpd, or almost 4 million barrels. The organization however was quick to point out that this increase is also attributed to oil sand and shale production. In addition, Canada’s output will be hinged on crude oil prices.