The Organization of the Petroleum Exporting Countries (OPEC) saw the price of its reference basket of crude oil components fall by 3.9% in October to $59.91 a barrel, following a September increase of 4.6% and an August decline of nearly 8%. The drone attack on Saudi Arabian oil facilities in mid-September boosted the price, but virtually all that has been given back on continued expected weakness in the global economy and weakness in demand for crude oil.
OPEC expects demand for crude to remain at the cartel’s previous estimate for year-over-year growth of 980,000 barrels. OPEC attributed the downward revision to expected lower demand from the Americas region. The cartel also maintained its projection for 2020 demand growth at 1.08 million barrels. OPEC cut its 2020 demand growth projection by 60,000 barrels in its September report.
The data was published Thursday in OPEC’s Monthly Oil Market Report for November. The cartel continues to expect 3% global GDP growth in 2019, commenting that “a small downward revision is expected for the Euro-zone and Brazil’s forecast was revised up slightly.”
OPEC left its non-OPEC supply growth estimate for 2019 at 1.82 million barrels a day, following last month’s cut of 160,000 barrels a day based on declining U.S., U.K. and Norwegian production. U.S. production growth was cut by 70,000 barrels a day in September to 1.8 million barrels, and last month OPEC lowered that estimate by another 130,000 barrels.
The cartel’s projection for 2020 non-OPEC supply growth was revised downward by 36,000 barrels to 217,000 barrels a day. Total non-OPEC supply for 2020 is now forecast at 66.46 million barrels a day, an increase of 2.16 million barrels compared to 2019 supply.
2019’s estimated demand for OPEC crude remained unchanged month over month at 30.7 million barrels. Projected demand for OPEC crude in 2020 also remained unchanged at 29.2 million barrels a day, after rising by 200,000 barrels in October’s report. Next year’s demand for OPEC crude is about 1.1 million barrels below the forecast demand for this year.
Brent crude traded up about 1% Thursday morning at $63.00, and WTI traded up about 0.8% at $57.61. Both remain well short of three-month highs, however.