OPEC Boosts 2018 Demand Forecast, Signaling Faster RebalancingBy
Demand estimate for OPEC crude raised by 400,000 barrels a day
If group prolongs curbs, stockpiles may fall by 670,000 a day
OPEC boosted forecasts of demand for its crude in 2018, signaling that the rebalancing of the global market could gather pace.
The Organization of Petroleum Exporting Countries raised estimates for the amount it will need to pump to meet demand next year by 400,000 barrels a day to 33.4 million a day, according to a monthly report from the group. As that’s about 670,000 a day more than OPEC produced in the third quarter, global inventories would diminish further in 2018 if the group and its allies continue to keep supplies restrained.
OPEC and Russia have been leading a worldwide coalition of oil producers this year in production cuts aimed at ending a glut that has weighed on prices and battered their economies since 2014. They’ll meet on Nov. 30 in Vienna, where they may decide to prolong the measures beyond their scheduled end in March.
Output cuts are the “only viable option” for completing the rebalancing of the market, OPEC Secretary-General Mohammad Barkindo said in Abu Dhabi on Monday. Last week he said that no producers opposed continuing the accord and the only question was the duration of the extension.
Production from OPEC’s 14 members shrank by 150,900 barrels a day last month to 32.59 million a day as a result of lower output from Iraq, according to the report. The country’s exports have been curtailed because of a dispute between the central government and the semi-autonomous Kurdish region. Iraqi production fell by 131,000 barrels a day to 4.38 million a day.
The report showed that supply curbs by OPEC, Russia and their partners are paying off. Oil inventories in developed nations dropped again in September, bringing the total decline this year versus their five-year average to 183 million barrels. OPEC has said its main objective is to return stockpiles to the five-year mean; they remain 154 million barrels above this level.
OPEC increased estimates for global demand in 2018 by 300,000 barrels a day to 98.45 million a day. Demand will expand next year by 1.5 million a day, or 1.6 percent.