As it has become a trend in recent months, OPEC revised up again on Thursday its estimate for non-OPEC supply growth in 2018, but it also lifted its forecast for global oil demand growth, while it reported the cartel’s lowest crude oil production in a year in March.
At the same day that OPEC published its MOMR, its Secretary General Mohammad Barkindo told Reuters in an interview that he sees the oil market achieving balance in the second to third quarter this year, earlier than previously expected—at the end of 2018.
“There is growing confidence that the declaration of cooperation will be extended beyond 2018,” Barkindo told Reuters.
“Russia will continue to play a leading role,” he said, adding that OPEC and partners will discuss an initial draft of a longer-term cooperation framework at their meeting in June.
In its closely watched Monthly Oil Market Report, OPEC revised up its expectation for non-OPEC supply this year by 80,000 bpd from the previous month’s assessment, on the back of higher-than-expected production in the first quarter, mostly in the United States and in the former Soviet Union. Non-OPEC supply is expected to rise by 1.71 million bpd year-on-year in 2018, compared with 900,000-bpd growth in 2017.
Non-OPEC supply is “now expected to grow at a faster pace”, OPEC said, noting that the key driver is the U.S. with expected increase of 1.5 million bpd, followed by a distant second Canada with 290,000 bpd and Brazil with 210,000 bpd growth.
In terms of demand, OPEC revised higher its forecast for world oil demand growth by 30,000 bpd compared to last month’s assessment. The cartel now expects global demand growth at 1.63 million bpd this year.
“This mainly reflects the positive momentum in the OECD in the 1Q18 on the back of better-than-expected data, and supported by development in industrial activities, colder than-anticipated weather and strong mining activities in the OECD Americas and the OECD Asia Pacific,” OPEC said in its report, which is more upbeat about demand growth than the March MOMR.
Total oil consumption this year is seen at 98.70 million bpd with total world oil demand breaking a historical threshold of 100 million bpd in Q4, OPEC said today.
The OECD commercial oil stocks—whose five-year average OPEC is officially targeting in the production cut deal—were 43 million barrels above the latest five-year average, according to preliminary data for February. Crude stocks indicated a surplus of 55 million barrels, while product stocks were in a deficit of 12 million barrels below the five-year average, OPEC estimates.
OPEC’s crude oil production for March dropped by 201,400 bpd compared to February, to average 31.96 million bpd, according to OPEC’s secondary sources. This was the cartel’s lowest production in one year, as Venezuela’s output continued to plummet (down 55,300 bpd over February); Saudi Arabia cut 46,900 bpd from its February level; and Angola and Libya also registered big declines. The UAE, on the other hand, boosted production by 44,900 bpd from February, secondary sources data showed.
By Tsvetana Paraskova for Oilprice.com
