LONDON: Opec will need to pump slightly more oil than it thought in 2013 and expects global consumption to be much higher in the rest of the year, signs of a stronger market that argue against any calls for supply restraint when the group meets on May 31.
The Organisation of the Petroleum Exporting Countries in a monthly report yesterday forecast 2013 demand for its crude will average 29.84 million barrels per day (b/d), up 90,000b/d from the previous estimate.
Both world oil demand and the demand for Opec oil will increase in coming months. The average requirement for Opec’s crude in the second half will be 30.47 million b/d, up from 29.14 million b/d in the current quarter.
Saudi Arabia’s oil minister, in a speech in Ankara yesterday, said the outlook was brighter for big economies such as top oil consumer the United States, even though Europe was still struggling.
“Europe continues to grapple with austerity and anaemic levels of growth. That said, other regions are showing signs of progress,” Ali Ibrahim Al Nuaimi said. “Major economies are leading the way and the US economy is improving.”
Oil has dropped to just above $103 a barrel from almost $120 at the start of February, worrying some in Opec. But the expectation of stronger demand later in 2013 argues against any suggestion of lowering output, say Opec officials.
“On production issues, demand is expected to pick up, so most likely another rollover,” said an Opec delegate of the outcome of the group’s meeting in Vienna.
Opec for now is pumping more oil than its 30 million bpd official target. Output rose by 280,000b/d in April to 30.46 million bpd, according to secondary sources cited by the report, led by higher output in Saudi Arabia and Iraq.
While higher than the current demand for Opec crude, that output rate would match the average requirement in the second half of 2013.
Opec held its forecast for growth in world demand unchanged at 800,000bpd and repeated a warning that the rate of expansion could underperform due to the euro zone’s economic problems and uncertainties about China.
Another oil forecaster closely watched by the market, the US government’s Energy Information Administration, took a more bearish view on demand growth in its report on Tuesday, cutting its forecast by 70,000b/d to 890,000 bpd.
Reuters
