The Organization of Petroleum Exporting Countries raised estimates for the amount of crude it will need to produce this year, and said that prices at their highest in two years don’t signal any supply shortage.
OPEC predicts it will have to provide 29.8 million barrels a day this year, about 400,000 a day more than it estimated last month. The revision is based on economic growth and a colder-than-normal winter. Still, oil’s surge through $100 a barrel in London this year for the first time since 2008 does not signal any global supply deficit, the organization said.
“World economic activity along with the effect of frigid winter temperatures” is driving the change, the group’s Vienna-based secretariat said in a report today.
Global oil consumption will increase by 1.4 million barrels a day, or 1.6 percent, this year to 87.7 million barrels a day, according to OPEC. The International Energy Agency, which advises consuming nations, said in its monthly report today that demand will grow by 1.7 percent to 89.3 million barrels.
Crude futures traded above $100 a barrel in London today, having climbed to a 28-month high of $103.37 on Feb. 3 on concern that political unrest in North Africa might disrupt Middle East oil exports. It was at $102.37 as of 10:50 a.m. London time.
“Supply fears are, however, unfounded, as any halt in shipments through the Suez Canal, or the Suez-Mediterranean pipeline, could be compensated relatively quickly, by rerouting crude cargoes,” OPEC said. “Even before the crisis, these routes were not being utilized at full capacity.”
OPEC made a “minor revision” to its estimate of supplies from outside the organization. Non-OPEC exporters will raise production by 420,000 barrels a day this year to 52.68 million a day, about 20,000 a day more than the organization had predicted last month.
The group’s compliance with output quotas agreed to in 2008 fell last month as increased production from Saudi Arabia, Angola, and the United Arab Emirates offset declines in Nigeria and Iran.
Daily output from the 11 members bound by quotas rose 138,500 barrels a day to 27.01 million barrels a day in January. That implies compliance of 48 percent compared with a revised 52 percent in December.
OPEC’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. Iraq is exempt from the quota system.