OPEC forecasts high demand

Source:Reuters-Global Times Published: 2017/9/13 17:33:40

Market rebalancing under way amid price rises

The Organization of the Petroleum Exporting Countries (OPEC) has forecast higher demand for its oil in 2018 and pointed to signs of a tighter global market, indicating its production-cutting deal with non-member countries is helping to tackle a supply glut that has weighed on prices.

In a monthly report, OPEC said the world would need 32.83 million barrels per day (bpd) of OPEC crude next year, up 410,000 bpd from its previous forecast.

OPEC said inventories were falling and that an increase in the price of Brent crude for immediate delivery to a premium over that for later supplies, known as "backwardation", raised hopes that a long-awaited market rebalancing was under way.

"This is due to the shooting up of demand for prompt-loading barrels and amid increasing sentiment that the oil market will rebalance over the next year with a major drawdown in crude and product stocks," OPEC said in the report.

"This first stirring of backwardation since oil prices were above $100 a barrel is seen as a sign of tightening supplies and strong demand."

Oil last traded above $100 a barrel in 2014, the year in which prices began to slide due to excess supply. US West Texas Intermediate CLc1 was unchanged at $48.23 a barrel on Wednesday, as a US stockpile rise takes shine off OPEC higher demand view.

In a deal aimed at clearing the glut, OPEC is curbing output by about 1.2 million bpd while Russia and other non-OPEC producers are cutting half as much until March 2018.

OPEC said inventories in developed economies declined by 18.7 million barrels in July to 3.002 billion barrels, 195 million barrels above the five-year average.

OPEC raised its forecasts for global oil demand growth in 2017 and 2018, saying consumption would rise by 1.35 million bpd next year, 70,000 bpd more than previously thought.

Supply is rising outside the group.

OPEC estimated supply from non-OPEC countries next year would rise by 1 million bpd.

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