OPEC's output boost won't ease tight supply: EIA

WASHINGTON (Reuters) - OPEC's decision to increase its oil output by 500,000 barrels per day (bpd) beginning on November 1 won't do much to ease tight supplies, the U.S. Energy Information Administration said on Wednesday.

"OPEC's announcement signals an attempt by OPEC to provide enough supplies to prevent a sharp increase in prices, but is unlikely to alter the overall tight market situation," the EIA said in its weekly review of the oil market.

"The market fundamentals, characterized by rising demand for OPEC oil and fairly low surplus capacity, should keep markets firm even with the planned increase in OPEC production, leaving the market vulnerable to supply disruptions," the EIA said.

The EIA said it expects September oil production from OPEC, excluding members Iraq and Angola who are not subject to the group's output quotas, will average 26.935 million bpd, down from 27.670 million bpd a year earlier.

Iraq's September output is pegged at 2 million bpd and Angola's at 1.749 million bpd, putting OPEC total oil production this month at 30.684 million bpd, down from 31.218 million bpd a year ago, the EIA said.

OPEC's total surplus oil production capacity in September is estimated at between 1.970 million and 2.470 million bpd, the agency said.

"OPEC will likely continue to add supply gradually to the market in an attempt to avoid a sharp price rise," the EIA said.

"It will be critical to monitor OPEC production levels over the winter months, especially the Middle East countries that have accounted for most of the production cuts over the past year and hold two thirds of surplus production capacity - Saudi Arabia, Kuwait, and the United Arab Emirates," the EIA said.