OPEC in its market report for September offered more of the same when compared with the previous month's assessment. U.S. gasoline prices and oil in general were shaken by Hurricane Isaac last month, though any major fluctuations there were expected to be temporary. Meanwhile, the European economy is expected to return to growth next year, though the U.S. economy is anticipating a modest decline. Beijing, for its part, can expect further stagnation. In terms of the impact on global oil consumption, OPEC saw few dark clouds on the horizon keeping its demand forecast from the previous month in place.
The U.S. Energy Department's Energy Information Administration, in its short-term market outlook, said oil demand should grow faster than it anticipated in its August report. The White House this week suggested tightening oil markets and high U.S. gasoline prices meant a release from the Strategic Petroleum Reserve might be needed to allay economic concerns. Hurricane Isaac, refinery problems in Venezuela and strains in the MENA region meant less crude could be available. The EIA in its report, however, said it expects crude oil prices to decline steadily over the course of the year.
Taking his cue from the IEA, Saudi Oil Minister Ali al-Naimi said this week that oil markets were well supplied and crude oil inventories were adequate. Given credence to concerns from Washington, OPEC said, however, that U.S. commercial crude oil inventories were down for their second straight month by 13.3 million barrels. Nevertheless, U.S. stocks remained well above their five-year average.
Growth in non-OPEC supply, meanwhile, was expected to increase by 700,000 barrels per day in part because of gains from the Brazil, Canada, China, Colombia, Russia and the United States. The increase was expected to extend into 2013 with gains of 900,000 bpd. Non-OPEC output was expected to decline, however, in Norway, the Sudans, Syria and the United Kingdom.
In terms of the global economy, OPEC said it expected the U.S. economy to shrink by 0.3 percent in 2013 to 2.0 percent. China, for its part, can expect its economy to retract by 0.1 percent to 8 percent growth for next year. The Japanese economy, meanwhile, should nearly grind to a halt with a 1.2 percent growth rate for 2013. On the positive side, the Indian economy should expand by 0.3 percent to reach 6.6 percent in 2013 while the eurozone should return to growth after suffering further contractions this year.
Despite the sluggish U.S. economy, OPEC said it was holding up "relatively well" when compared to other markets. In terms of the Eurozone, however, the cartel said that while the debt crisis seems to be contained, the economic forecast was relatively bleak. Nevertheless, expected growth for the world economy remains unchanged from the previous report at 3.3 percent for next year. World oil demand growth was unchanged as well.
By. Daniel J. Graeber of Oilprice.com