OPEC forecast higher demand for its oil in 2018 said its production-cutting deal with rival producers was getting rid of a glut, pointing to a tighter market that could move into a deficit next year. In a monthly report, the Organization of the Petroleum Exporting Countries said the market could find support in winter from low distillate fuel stocks and forecasts of colder weather, which would boost distillates demand for heating.
OPEC said that the world would need 33.06 million barrels per day (bpd) of its crude next year, up 230,000 bpd from its previous forecast. That is its third consecutive monthly increase in the projection from its first estimate made in July.
The report illustrates growing confidence among OPEC officials that its supply cut is working. Still, OPEC is not banking on a surge in prices, saying in the report crude is expected to remain at USD 50 to USD 55 a barrel in the next year. Brent oil traded higher near USD 57.
OPEC said that “With the market moving into the winter season, distillate fuel supplies are notably tight, representing a change from the excess supplies seen in the last two years. OPEC and key non-OPEC oil producers continue to successfully drain the oil market of excess barrels.”
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.
The 14-country producer group said its oil output in September, as assessed by secondary sources, came in below the 2018 demand forecast, even though production climbed by about 89,000 bpd to 32.75 million bpd.
In a further sign that the supply excess is easing, OPEC said inventories in developed economies declined by 24.7 million barrels in August to 2.996 billion barrels, 171 million barrels above the five-year average. Source : REUTERS Pipe Industry Co., Limited (www.wilsonpipeline.com)
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