Middle East > Iraq > OPEC raises forecasts for global oil demand

Iraq: OPEC raises forecasts for global oil demand

2017/08/21

OPEC boosted estimates of request for its crude this year and next amid stronger-than-expected fuel consumption and a weaker outlook for rival supply.

The Organization of Petroleum Exporting Nations raised forecasts for the all it needs to supply in 2017 and 2018 by about 200,000 barrels a day for each year, according to a statement from its secretariat in Vienna. Still, a rebound in Libyan production pushed the group’s output last month to the highest this year, undermining its plan to rebalance oversupplied world markets.

Oil prices have lost about 6 % in London this year as production cuts by OPEC and Russia fail to clear a world glut. From presently on Brent futures have stabilized above $50 a barrel this month as U.S. crude inventories diminish, signalling OPEC’s actions are finally having some impact.

The organization increased projections for world oil request in 2017 and 2018 by about 100,000 barrels a day for each year. Consumption proved stronger than expected in developed nations during the second quarter, it said.

OPEC as well lowered estimates for rival supply, by 50,000 barrels a day in 2017 and 90,000 a day in 2018, following weak output in the U.S. and Canada last quarter.

The statement indicated that OPEC’s strategy to rebalance the market is having some success, with oil stockpiles in developed nations falling by 21.9 million barrels in June.

Still, at just over three billion barrels, this leaves them about 252 million above their five-year average. OPEC has said its major objective is to reduce inventories to average levels.

The plan has been complicated by a rebound in supply from Libya and Nigeria, which were exempt from last year’s agreement to cut production while they tackled domestic unrest and supply outages.

Libyan output climbed by 154,300 barrels a day to about one million a day in July, according to external data sources compiled by OPEC. Production from all 14 members reached 32.87 million a day.

Iraq, which has lagged behind other nations in delivering its promised cuts, showed some development in its adherence. The country’s output fell by 33,100 barrels a day to 4.468 million a day, still above its target.

Iraqi Oil Minister Jabbar al-Luaibi flew Wednesday to meet his Saudi counterpart Khalid Al-Falih, who has promised to increase pressure on non-compliant nations.

While OPEC uses external data — known as secondary sources — to monitor compliance with supply curbs, the statement as well includes production data submitted due by member nations.

In an unusual omission, there was no direct data from Saudi Arabia for the new month in this statement. Secondary sources showed the kingdom’s output at 10.067 million barrels a day in July, slightly above its target.

Despite the production increases, the statement indicated that OPEC can make additional significant evolution in depleting inventories during the second half of the year.

If the group’s output remains steady at 32.87 million barrels a day, it would shrink world stockpiles by about 68 million barrels.

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