The Organization of the Petroleum Exporting Countries (OPEC) saw the price of its reference basket of crude oil components rise by 5.6% to 66.48 a barrel in December, following a gain of 5.1% in November. The December price is the highest since April 2019.
Prices were strengthened on optimism for rising demand now that trade tensions between the United States and China have relaxed somewhat. OPEC also said the rise is due, in part, to “continued market stabilization efforts” by the cartel and its partners, aka OPEC+.
OPEC expects demand for crude to slip by 50,000 barrels a day from 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 raised its projection for 2020 demand growth by 14,000 barrels a day to 1.22 million barrels. OPEC cut its 2020 demand growth projection to 108,000 barrels in its September report and maintained that level until this latest report.
The data appeared Thursday in OPEC’s Monthly Oil Market Report for January 2020. The cartel continues to expect 3% global gross domestic product growth in 2019, rising to 3.1% this year.
OPEC lifted its non-OPEC supply growth estimate for 2019 by 40,000 barrels a day to 1.86 million barrels a day, following last month’s cut of 160,000 barrels a day based on declining production from the United States, Russia and some OECD countries. U.S. production growth was raised by 50,000 barrels a day 1.84 million barrels.
The cartel’s projection for 2020 non-OPEC supply growth was revised upward by 180,000 barrels to 2.35 million barrels a day. Total non-OPEC supply for 2020 is now forecast at 66.68 million barrels a day, an increase of 2.34 million barrels compared to estimated 2019 supply.
2019’s estimated demand for OPEC crude dipped by 100,000 thousand barrels a day month over month to 30.6 million barrels. Projected demand for OPEC crude in 2020 also declined by 100,000 barrels to 29.5 million barrels a day. Next year’s demand for OPEC is about 1.1 million barrels below the forecast demand for this year.
Brent crude traded down about 0.4% Thursday morning at $64.25 and West Texas intermediate traded down by a similar amount to $57.98. Both remain far short of 12-month highs, however.