OPEC cuts production, oil demand unchanged
Global oil demand growth in 2012 remained unchanged at 0.9 million barrels a day, but uncertainty surrounds the 2013 forecast, according to latest monthly oil market report of the Organization of Petroleum Exporting Countries.
OPEC’s ministers warned Thursday of a “horizon full of turbulence” that could lead to a significant decline in oil-demand growth next year. OPEC’s report showed the group’s output fell last month to its lowest since February.
Uncertainties hanging over the global economy pose significant risks to OPEC’s oil demand growth forecast for 2013, the group said. A worsening of the current situation could reduce the current forecast for growth of 0.8 million barrels a day next year by as much as 20%, the report said.
OPEC’s own production declined last month to 31.2 million barrels a day, according to data from secondary sources compiled by OPEC analysts. This was due mainly to declines in Iranian, Saudi Arabian, Libyan and Angolan oil production. Iran’s production fell by 173,000 barrels a day in July, the first month after the European Union imposed a full embargo on the country’s oil.
“World oil demand has overcome earlier expectations of a declining momentum and moved to a more stabilized trend, supported by the summer driving season, the summer heat, and the continued shutdown of most of Japan’s nuclear capacity,” the organisation said in their monthly oil market report.
Non-OPEC oil supply was expected to increase by 0.7 million barrels per day in 2012. In 2013, the supply forecast is 0.9 million barrels per day.
Crude-oil futures rose Thursday, buoyed by Chinese data and news that a tropical storm bearing down on Mexico has closed ports and oil installations in the Gulf of Mexico. Gas price also added nearly 5%.
The OPEC Reference Basket in July rebounded from a three-month long declining streak to settle near $100/b, almost 6% above the previous monthly level. All Basket component values improved by around $6. Year-to-date, the Basket averaged $110.28/b. Crude oil futures prices recovered from the low levels reached in June, although most of the fundamental reasons behind the fall remain in play as the greater uncertainty economic outlook persists and global crude inventories are somewhat high. ICE Brent front-month prices increased by over 7% to settle at $102.72/b, while the WTI front-month improved by $5.53 to average $87.93/b. So far this month, the OPEC Reference Basket has continued to rise, standing at $108.36/b on 8 August.