In its Monthly Oil Market Report for January, released Thursday morning, the Organization of the Petroleum Exporting Countries (OPEC) noted that the cartel’s average price for its reference basket rose to $62.06 a barrel in December, its highest level in since June 2015 and more than $1.30 a barrel more than the November average. Since June, the price has increased by more than $16.50 a barrel. For all of 2017 the reference basket averaged $52.43 per barrel, up $11.76 compared to 2016.
Global demand is forecast to average 96.99 million barrels a day in 2017, up 40,000 barrels from last month’s estimate. The current estimate for 2018 global demand is 98.51 million barrels a day, up by 60,000 from the prior month’s estimate.
Global demand growth for 2017 was forecast at 1.57 million barrels a day, up by 400,000 from the prior month’s estimate. The cartel’s projected demand growth for 2018 is now 1.53 million barrels a day, a 200,000 barrel increase since last month’s report.
The cartel estimated 2017 non-OPEC supply grew by 770,000 barrels a day, a month-over-month downward revision of 40,000 barrels. For 2018 non-OPEC supply is expected to rise by 1.15 million barrels a day to an average of 58.94 million, an increase of 130,000 barrels a day compared with last month’s estimate. U.S. production growth next year is now expected to rise by 1.15 million barrels a day, up by 10,000 from last month’s forecast.
2017’s estimated demand for OPEC crude slipped to 32.9 million barrels a day, up by some 100,000 compared to 2016. Demand in 2018 is now estimated at 33.1 million barrels a day, up 200,000 over the 2017 level, but down by 100,000 barrels compared to last month’s estimate.
The cartel said OPEC production in December, as reported by secondary sources, rose month over month by 43,000 barrels a day to a daily average of 32.42 million. Saudi Arabia’s December production fell to 9.92 million barrels a day, a month-over-month decrease of about 10,000.
The Saudis themselves reported total production of 9.98 million barrels a day in December, up by about 90,000 compared to November. Under the production cuts initiated in January, Saudi Arabia’s quota is 10.058 million barrels a day.
Crude prices are slightly higher Thursday morning, with West Texas Intermediate for February delivery trading up about 0.2% at $64.09. Brent crude for March delivery traded up about 0.1% at $69.43.