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As it had done in several consecutive monthly reports, OPEC lifted again on Wednesday its estimates for non-OPEC oil supply growth this year, but this time the cartel’s estimates that for the first time, rival oil supply growth led by the U.S. will outpace global oil demand growth in 2018.
In its closely watched Monthly Oil Market Report published today, OPEC expects non-OPEC supply in 2018 to increase by 1.66 million bpd, compared to expectations of 1.4 million bpd growth from the previous monthly report.
OPEC revised up forecasts for non-OPEC supply for 2018 by 280,000 bpd in absolute terms, compared with last month’s assessment, to average 59.53 million bpd. Non-OPEC supply “is now expected to grow at a faster pace, leading also to an upward revision in y-o-y growth by 0.26 mb/d to average 1.66 mb/d, compared to the previous MOMR,” OPEC said, noting that the key growth drivers will be the U.S., Canada, Brazil, and the UK.
On the demand side, OPEC expects world oil demand this year to rise by 1.60 million bpd to average 98.63 million bpd, marginally higher than last month’s assessment. Most of the oil demand growth is anticipated to originate from Asia, led by China, followed by India, and then by OECD Americas, OPEC says.
This is the first monthly report since OPEC began forecasting 2018 figures in July 2017 that its prediction of non-OPEC supply growth has exceeded its global demand forecast, Platts notes.
Oil demand will be supported by the strong economy, OPEC said, but warned that “the most recent trade-related developments may provide challenges to the growth momentum as global trade has been an important factor contributing to the world economy.”
In terms of the five-year average of OECD commercial stocks that OPEC is officially targeting in the production cut deal, preliminary data for January showed that total OECD commercial stocks were 50 million barrels above the latest five-year average, with crude stocks at a surplus of 74 million barrels and product stocks at a deficit of 24 million barrels to the seasonal norm. The total OECD commercial stocks dropped 206 million barrels compared to the same time one year ago, OPEC said.
Related: China Now Produces More Oil Abroad Than At Home
OPEC’s production dropped by 77,000 bpd to average 32.19 million bpd in February, the cartel’s secondary sources estimates showed.
While it was widely expected that OPEC’s production in February would be well below the implied combined ceiling of about 32.73 million bpd, analysts and players were eager to see how low the oil production of crisis-stricken Venezuela dipped last month.
Venezuela’s oil production plunged by another 52,400 bpd in February over January and averaged 1.548 million bpd last month. Production in Nigeria, Libya, and Angola increased. OPEC’s de facto leader and largest producer Saudi Arabia continued to pump just below 10 million bpd at 9.982 million bpd.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.
This is neither here or there when compared to the glut since 2014 which at one time amounted to more than 2.5 mbd or 912.5 million barrels or even with the total OECD commercial stocks of 50 million barrels above the latest five-year average. Moreover, it will have no effect whatsoever on oil prices.
However, the fact that total OECD commercial stocks dropped 206 million barrels in one year speaks volumes about the robustness of the global economy and the global demand for oil and the positive impact that the OPEC/non-OPEC production cut agreement has had on the market and oil prices.
It also speaks volumes about the integrity and credibility of OPEC’s reporting and projections. This is a far cry from the IEA’s Oil 2018 report and a breath of fresh air from the continuous hyping of the EIA about US shale oil production and risings in US oil inventories.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London