In its Monthly Oil Market Report for August, released Monday morning, the Organization of the Petroleum Exporting Countries (OPEC) noted that the cartel’s average price for its reference basket rose by five cents to $73.27 a barrel in the month of July. Year to date, OPEC’s reference basket is up $19.38 per barrel compared to the same period in 2017.
The cartel said OPEC production in July, as reported by secondary sources, rose month over month by 41,000 barrels a day to a daily average of 32.32 million barrels. Saudi Arabia’s July production fell to 10.387 million barrels a day, a month-over-month decrease of about 53,000.
The Saudis themselves reported total production of 10.288 million barrels a day in August, down by about 201,000 compared to July. Under the production cuts initiated in January, Saudi Arabia’s quota is 10.058 million barrels a day.
In June the Saudis raised production by more than 400,000 barrels a day, and the August cutbacks follow a July agreement between the cartel and its partners, including Russia, to increase production. Even with the July cutback, Saudi Arabia’s output remains higher than the 2017 yearly average and higher than either the first or second quarter average this year. Production from Nigeria and Iraq more than made up for the Saudi’s July output reduction.
Global demand is forecast to average 98.83 million barrels a day in 2018, down by 20,000 barrels. The current estimate for 2019 global demand is 100.26 million barrels a day, down by 30,000 from last month’s estimate.
Global demand growth for 2018 was forecast at 1.64 million barrels a day, down by 10,000 from the prior month’s estimate. The cartel’s projected demand growth for 2019 is now 1.43 million barrels a day, down by 20,000 since last month’s report.
The cartel estimated 2018 non-OPEC supply rose by 73,000 barrels a day to 59.62 million. For 2019, non-OPEC supply is expected to rise by 2.13 million barrels a day to an average of 61.75 million, an increase of 30,000 barrels a day compared with last month’s estimate.
U.S. production growth in 2018 is now expected to rise by 1.69 million barrels a day, down by 10,000 from last month’s forecast. The cartel’s estimate of U.S. in 2019 also slipped slightly from 17.5 million barrels a day to 17.44 million.
2018’s estimated demand for OPEC crude was unchanged at 32.9 million barrels a day, down by some 600,000 compared to 2017. Demand in 2019 is now estimated at 32 million barrels a day, down by around 800,000 from the 2018 level and by 200,000 compared to last month’s estimate.
Crude prices were lower Monday morning, with West Texas Intermediate for September delivery trading down about 0.4% at $67.33. Brent crude for October delivery traded up about 0.1% at $72.71.