Based on its Monthly Oil Market Report for April, released Monday morning, the Organization of the Petroleum Exporting Countries (OPEC) noted that the cartel’s average price for its reference basket rose by 7.3% to $68.43 a barrel in the month and is now 26.7% higher than in May of last year. Year to date, OPEC’s reference basket is up $13.85 per barrel compared to the same period in 2017.
Global demand is forecast to average 97.07 million barrels a day in 2017, up 13,000 barrels from last month’s estimate. The current estimate for 2018 global demand is 98.85 million barrels a day, up by 22,000 from the prior month’s estimate.
Global demand growth for 2017 was forecast at 1.65 million barrels a day, unchanged from the prior month’s estimate. The cartel’s projected demand growth for 2018 is now 1.65 million barrels a day, also up by 20,000 since last month’s report.
The cartel estimated 2017 non-OPEC supply dipped by 10,000 barrels a day to 57.89 million barrels a day. For 2018, non-OPEC supply is expected to rise by 1.72 million barrels a day to an average of 59.62 million, a decrease of 12,000 compared with last month’s estimate.
U.S. production growth in 2018 is now expected to rise by 1.53 million barrels a day, up by 30,000 from last month’s forecast. This number remains particularly worrisome to the cartel because it shows no signs of either stabilizing or falling. U.S. rig counts have continued to rise sharply, implying that production will continue to rise as new wells come online. The latest version of the U.S. Energy Information Administration’s drilling productivity report is due later today.
2017’s estimated demand for OPEC crude was unchanged at 33 million barrels a day, up by some 600,000 compared to 2016. Demand in 2018 is now estimated at 32.7 million barrels a day, down by 300,000 from the 2017 level and 100,000 higher compared to last month’s estimate.
The cartel said OPEC production in April, as reported by secondary sources, rose month over month by 12,100 barrels a day to a daily average of 31.93 million. Saudi Arabia’s April production rose to 9.96 million barrels a day, a month-over-month increase of about 46,500.
The Saudis themselves reported total production of 9.868 million barrels a day in April, down by about 39,100 compared to March. Under the production cuts initiated in January, Saudi Arabia’s quota is 10.058 million barrels a day.
Crude prices are higher Monday morning, with West Texas Intermediate for June delivery trading up about 0.1% at $70.79. Brent crude for July delivery traded up about 0.4% at $77.40.