OPEC Reports Lowest Oil Output In Six Months; Fears Shale Production Surge
True to its perpetually optimistic form, OPEC, which last month for the first time conceded the threat posed by rising US shale production…
… sharply raised its demand forecast for cartel oil in 2018, ahead of the OPEC meeting at the end of November.
And, according to OPEC’s latest market report for the month of December, demand is set to continue rising, with global oil demand projected to grow at around 1.53 mb/d in 2017, in line with last month’s forecast. China is projected to lead oil demand growth in the non-OECD, followed by Other Asia – which includes India – and OECD Americas. Which means that an unexpected Chinese landing, whether hard or soft, will have an adverse impact on oil in addition to all other commodities.
Separately, in 2018, world oil demand is expected to grow by 1.51 mb/d according to the latest OPEC forecast. OECD will contribute positively to oil demand growth, adding some 0.28 mb/d, whereas the bulk of the growth will come from the non-OECD with 1.23 mb/d of potential growth. For 2018, the main assumptions behind the forecast are firm economic growth, lending support to industrial and construction fuels in both OECD and non-OECD. Expansion in the transportation sector is expected to provide the bulk of oil demand growth. Growth in petrochemical demand is projected to be one of the fastest-growing contributors in US, China, South Korea and the Middle East. As such, world oil demand growth is estimated at 1.51 mb/d in 2018, compared to 1.26 mb/d in the initial forecast.
More important than demand, however, was the November supply of OPEC oil, which declined by 133.5K to below 32.5 million bbl, a fresh six month low if only 195K bbl lower than last year’s output, confirming that ahead of last year’s production cut agreement, OPEC furiously ramped up production effectively offsetting the subsequent output limit.
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