By Grant Smith
LONDON (Bloomberg) — OPEC raised estimates for the amount of crude it will need to supply next year amid a stronger outlook for global oil demand.
The Organization of Petroleum Exporting Countries boosted the 2018 forecast in its monthly report by 400,000 bopd to 32.8 MMbpd on increased demand projections for Europe and China. Still, that’s about in line with the group’s production last month, meaning OPEC won’t be able to reverse its current output curbs if it wants to keep world markets balanced next year.
Oil prices remain near $50/bbl despite nine months of output cuts by a coalition of oil producers led by OPEC and Russia. The countries will meet in November to decide whether the curbs need to be extended past their scheduled expiry in March.
The impact on demand from Hurricane Harvey, which briefly shuttered about one-quarter of U.S. refining capacity, will be “negligible,” according to the report. This year’s hurricane season still has the potential to be “particularly destructive,” with consequences for the oil market, it said.
The organization increased global oil demand estimates for 2015 through 2018. It raised the 2018 forecast the most, by 400,000 bpd to 98.1 MMbpd. As a result, the growth rate anticipated for next year also increased, by about 100,000 bopd, to 1.35 MMbpd.
OPEC also trimmed forecasts for growth in oil supplies outside the organization next year, by 100,000 bpd, amid lower expectations for Russia and Kazakhstan. Non-OPEC output is now projected to expand by 1 MMbopd, or 1.7%, in 2018.
Output from OPEC’s 14 members slipped by 79,100 bopd to 32.755 MMbpd in August amid a retreat in Libyan production, according to the report.
Cutbacks implemented by the group and its partners since the start of the year are reducing the surplus in world oil inventories, the report showed. The stockpile overhang in developed nations stood at 195 MMbbl after declining again in July.