In its Monthly Oil Market Report for June, released Wednesday morning, the Organization of the Petroleum Exporting Countries (OPEC) noted that the cartel’s price for its reference basket fell to $45.21 a barrel (down 8.1%) last month. This is the second consecutive monthly decline in the basket price and amounts to an average decline of nearly $8 a barrel in the past two months.
Global demand growth for 2017 was flat at 1.27 million barrels a day, a daily average of 96.4 million barrels. The cartel’s projected demand growth for 2018 is now 1.26 million barrels a day, for an average 97.6 million barrels a day.
The cartel lowered its estimate of non-OPEC production for 2017, forecasting non-OPEC supply to decrease by 80,000 barrels a day and average 57.82 million barrels a day for the year. For 2018 non-OPEC supply is expected to grow by 1.14 million barrels a day to an average of 58.96 million barrels.
2017’s estimated demand for OPEC crude rose by 300,000 barrels a day to 32.3 million barrels a day. Demand in 2018 is now estimated at 32.2 million barrels a day.
The cartel said OPEC production in June, as reported by secondary sources, rose by nearly 400,000 barrels a day to a daily average of 32.61 million barrels. Saudi Arabia’s June production rose to 9.95 million barrels a day, a month-over-month increase of 51,300 barrels a day.
The Saudis themselves reported total production of 10.07 million barrels a day in June, up by 190,000 barrels a day compared to May. Under the production cuts initiated in January, Saudi Arabia’s quota is 10.058 million barrels a day and June marks the first month that the Saudis have exceeded their quota.
On Tuesday the U.S. Energy Information Administration (EIA) forecast the global liquid fuel inventories would decline by an average of 100,000 barrels a day in 2017 and increase by 200,000 barrels a day in 2018. Last year global inventories rose by an average of 300,000 barrels a day.
Global consumption of petroleum and other liquid fuels averaged 96.9 million barrels a day in 2016 according to the EIA, an increase of 1.5 million barrels from the 2015 level. Consumption growth is forecast at 1.5 million barrels a day in 2017 and 1.6 million barrels a day in 2018, with 1.2 million barrels of the growth in both years coming from developing nations.
Crude prices are rising Wednesday morning, with West Texas Intermediate for August delivery trading up 1.5% at $45.72. Brent crude for September delivery traded up 1.3% at $48.14.