In its Monthly Oil Market Report for September, released Wednesday morning, the Organization of the Petroleum Exporting Countries (OPEC) noted that the cartel’s price for its reference basket rose by slipped nearly 0.5%, a setback following a price rise in August for the first time in six months. The basket price slipped $0.21 to $42.89 a barrel, down nearly $3 a barrel from a recent high of $45.84 in June.

Global demand growth for 2016 increased by 10,000 barrels a day to 1.24 million barrels per day, or a daily average of 94.4 million barrels. The cartel’s projected demand growth for 2017 remained unchanged at 1.15 million barrels a day to average 95.56 million barrels.

The cartel lowered its estimate of non-OPEC production for 2016 and now forecasts non-OPEC supply will drop by 680,000 barrels a day and average 56.3 million barrels a day for the year. Last month the cartel estimated non-OPEC supply would drop by 610,000 barrels a day. The estimate for non-OPEC supply for 2017 rose by 40,000 barrels a day to an average of 56.54 million barrels a day.

The cartel said OPEC production in September, as reported by secondary sources, rose by 22,000 barrels a day to a daily average of 33.39 million barrels. The cartel has produced more than 33 million barrels a day in each of the past four months, led by increases in production from Libya and Iraq. Iranian production has risen to 3.67 million barrels a day, compared with 4.46 million barrels a day from Iraq and 10.49 million barrels from Saudi Arabia.

The cartel also raised its estimate of 2016 demand for OPEC crude from 31.7 million barrels a day to 31.8 million barrels a day in the October report. The cartel now forecasts the demand for OPEC crude at 32.6 million barrels a day in 2017, up by 100,000 since the September report.

Oil markets have begun to price in a crude oil production cut that could range from around 250,000 barrels a day to as much as a million barrels a day. Even if that should materialize at the high end of the estimate, there is still so much oil in storage tanks around the world that crude tankers are slow-steaming or sailing in circles waiting for onshore storage to become available. The situation in the physical market (as opposed to the paper market) is much more unfriendly to higher prices.

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