Non-OPEC oil production will decline by 0.5 mb/d next year

Short-term sentiment aside, crude oil's supply-side news over the past month could be perceived as constructive for crude oil. US production fell for a sixth consecutive week to 9.12 mb/d through 11th September. This compares with a peak production of 9.61 mb/d in the week ending 5th, suggesting that supply is responding to depressed prices. 

This is a view shared by the IEA in its September Monthly Oil Report, estimated that non-OPEC production will decline by 0.5 mb/d next year, its sharpest fall in 24 years. Resumption in the decline of US rig counts and evidence that US shale firms are beginning to come under financial strain only add to the case for continued declines in production.

Meanwhile, outside of Iran, where there is a high likelihood that exports will increase next year, questions are arising about how much more crude oil OPEC could pump in the near term. OPEC production slipped by 0.14 mb/d to 31.26 mb/d in August, its first fall since February, according to data released from Platts this month. 

"Further supply-side adjustment, alongside a restoration in confidence around China's crude demand leaves Q4 2015 average Brent forecast intact at $60/bbl. The risks to this forecast, however, remain skewed to the downside due to increased uncertainty around global crude oil demand and US interest rate policy", says Lloyds bank.