The International Energy Agency said Wednesday that despite curbed shale growth the battle for market share between OPEC and non-OPEC producers has just started to heat up.
In its monthly oil market report the IEA said that while OPEC’s refusal to trim production is forcing U.S. shale producers to slow output growth other non-OPEC producers are still ramping up production.
According to the IEA U.S. shale output growth will slow by 80,000 barrels per day in May.
“An end to US crude builds does not spell the end of all oil inventory increases,” the IEA said.
While low oil prices have forced some North American upstreams to cut drilling spends the price rout has not slowed down production in Asia or South America.
Production in Brazil jumped 17 percent in the first quarter while Russia’s output spiked by 185,000 bpd year over year, the IEA said.
China should see production grow by 100,000 bpd this year to 4.3 million bpd while Vietnam and Malaysia are also expected to show production gains.
The strong international showing prompted the IEA to boost its 2015 non-OPEC production growth forecast by 200,000 bpd to 830,000 bpd.
Despite slowing U.S. shale output the report found that global oil supply growth held at a “steep” 3.2 million barrels per day year over year in April as higher OPEC production offset non-OPEC drops.
“It would thus be premature to suggest that OPEC has won the battle for market share. The battle, rather, has just started,” the IEA said.
Officials from Saudi Arabia, OPEC’s largest producer, have refused to curb production despite a nearly 50 percent oil price dive last year and Briticism from other OPEC members.
Saudi Arabian Oil Corporation chief Khalid Al-Falih said in January the country can not “single handedly balance the market on a downturn.”
OPEC will host its next scheduled meeting on June 5 in Vienna.
The IEA said more supply build ups are possible during the summer as energy demand drops and refining activity continue to increase across the globe.
“As the market continues to rebalance, pockets of supply growth are emerging from unsuspected corners. Despite tentatively bullish signals in the US, and barring any unforeseen disruption elsewhere, the market’s short-term fundamentals still look relatively loose,” the report concluded.