In its Monthly Oil Market Report, released Monday morning, the Organization of the Petroleum Exporting Countries (OPEC) noted that the cartel’s average price for its reference basket rose 7.7% to $66.85 a barrel in January, its highest level in since November 2014 and nearly $5 a barrel more than the December average. The cartel noted that crude oil futures lost about $6 a barrel in the first week of February. however.
Global demand is forecast to average 97.01 million barrels a day in 2017, up 20,000 barrels from last month’s estimate. The current estimate for 2018 global demand is 98.60 million barrels a day, up by 60,000 barrels from the prior month’s estimate.
Global demand growth for 2017 was forecast at 1.60 million barrels a day, up by 30,000 from the prior month’s estimate. The cartel’s projected demand growth for 2018 is now 1.59 million barrels a day, a 60,000-barrel increase since last month’s report.
The cartel estimated 2017 non-OPEC supply grew by 70,000 barrels a day to 57.86 million. For 2018, non-OPEC supply is expected to rise by 320,000 barrels a day to an average of 59.26 million, an increase of 25,000 barrels a day compared with last month’s estimate.
U.S. production growth next year is now expected to rise by 1.3 million barrels a day, up by 150,000 from last month’s forecast. It is this number that is particularly worrisome to the cartel because it shows no signs of either stabilizing or falling.
2017’s estimated demand for OPEC crude slipped to 32.8 million barrels a day, up by some 600,000 compared to 2016. Demand in 2018 is now estimated at 32.9 million barrels a day, up by 100,000 over the 2017 level, but down by 200,000 compared to last month’s estimate.
The cartel said OPEC production in January, as reported by secondary sources, fell month over month by 8,100 barrels a day to a daily average of 32.302 million barrels. Saudi Arabia’s January production rose to 9.977 million barrels a day, a month-over-month increase of about 23,300.
The Saudis themselves reported total production of 9.983 million barrels a day in January, up by about 3,000 compared to December. Under the production cuts initiated in January, Saudi Arabia’s quota is 10.058 million barrels a day.
Crude prices were higher Thursday morning, with benchmark West Texas Intermediate for March delivery trading up about 1% at $59.81. Brent crude for April delivery traded up about 0.8% at $63.27.