It revised its annual forecast for global demand up by 90,000 barrels a day compared to its July report and increased its outlook for production outside OPEC by the same amount. The price war that the Saudis goaded the rest of OPEC into back in November has not had the short-term effect the Saudis hoped for, and even OPEC’s own estimates show that production is on track to be higher than demand again next year. Accounting for just under half of the world’s total supply, the disclosure in an already-oversupplied market pushed crude prices lower.
Oil is now trading below $50 a barrel, close to its 2015 low after an 18-perent drop in July.
At 1323 BST, the Brent front month futures contract was down 1.71% or 86 cents at $49.55 a barrel, retreating from $50-level calls overnight. OPEC said it pumped 31.5 million barrels a day in July, up 100,000 barrels on higher output from Iraq, Saudi Arabia and Angola.
Oil’s collapse has been rapid and outpaced the predictions of most Wall Street forecasters.
Whether the increasingly inflamed Mideast geopolitical fracas will lead to a military confrontation on the huge Saudi Arabian oil-rich desert peninsula, which includes Kuwait, the Emirates, Oman and Qatar, may decide as to whether the current incremental oil prices could be forced upward meaningfully later in the year. “What’s more, we continue to expect oil prices to recover, albeit gradually, over the next year or so, rather than drop further”. Some members have discussed holding a meeting before the scheduled December 4 gathering, the Algerian official news agency reported citing Energy Minister Salah Khebri.
Tuesday’s report came a day after two of OPEC’s most vulnerable members, Libya and Algeria, said they would back an emergency meeting of the group-and a reversal of the group’s decision to maintain production.
Non-OPEC oil supply is expected to grow by 960,000 barrels in 2015, following an upward revision of 900,000 barrels, due to higher-than-expected output from non-OPEC producers mainly outside of North America.
In the report, OPEC still sees a sizeable slowdown in supply growth from non-OPEC next year and stuck to its view that rising global demand would erode the surplus in the market.