In its Monthly Oil Market Report for August, released Wednesday morning, the Organization of the Petroleum Exporting Countries (OPEC) noted that the cartel’s price for its reference basket rose to $46.93 a barrel (up 3.8%) in July. For the year to date, OPEC’s basket price has averaged $49.75 a barrel, a sharp increase over last year’s average of $37.20 for the same period.
The less-good news, from the cartel’s point of view, is that production rose for the third consecutive month to 32.87 million barrels a day. Libyan production increased by 154,300 barrels a day in July, accounting for 89% of OPEC production growth.
OPEC’s estimate of global demand growth for 2017 rose by 100,000 barrels a day to 1.37 million barrels a day, a daily average of 96.49 million barrels. The cartel’s projected demand growth for 2018 is now 1.28 million barrels a day for an average 97.77 million barrels a day.
The cartel lowered its estimate of non-OPEC production for 2017, forecasting non-OPEC supply to decrease by 28,000 barrels a day and average 57.77 million barrels a day for the year. For 2018, non-OPEC supply is expected to grow by 1.1 million barrels a day to an average of 58.87 million barrels, 42,000 barrels a day below the July projection.
2017’s estimated demand for OPEC crude rose by 400,000 barrels a day compared to 2016 demand to 32.4 million barrels a day. Demand in 2018 is now estimated at 32.4 million barrels a day.
The cartel said OPEC production in July, as reported by secondary sources, rose by 173,000 barrels a day to a daily average of 32.87 million barrels. Saudi Arabia’s June production rose to 10.07 million barrels a day, a month-over-month increase of nearly 32,000 barrels a day. Under the production cuts initiated in January, Saudi Arabia’s quota is 10.058 million barrels a day.
Crude prices were rising Thursday morning, with West Texas Intermediate crude for September delivery trading up 1.2% at $50.19. Brent crude for October delivery traded up 1% at $53.55.