The Organization of Petroleum Exporting Countries (OPEC) released its April Oil Market Report this morning. The cartel did not change its forecast for global demand growth of 800,000 barrels a day to a total of 89.7 million barrels a day.
The cartel estimates total non-OPEC supply to increase from an average of 52.96 million barrels a day in 2012 to 53.94 million barrels a day in 2013. The largest increase in supply is expected to come from the Americas, where supply is forecast to grow by an average of 740,000 barrels a day.
OPEC produced 30.19 million barrels of crude a day in March, based on non-OPEC data, and the cartel estimates that it will supply 29.7 million barrels a day in 2013.
OPEC estimates total liquids production at around 90 million barrels a day for March, just ahead of expected demand.
The annual forecast indicates that more crude will be produced than will be demanded. This is not good for the price of crude, at least from OPEC’s point of view. The cartel’s reference basket of crude grades fell by 5% in March to an average of $106.44 a barrel. In the first nine days of April, the price fell further, to $102.72 a barrel.
There is little that OPEC can do to boost its prices, especially in the face of a production surplus. The cartel may choose to reduce production, but that often has backfired, reducing revenues to the cartel members that depend heavily on oil revenues to keep their countries afloat.