The Organization of the Petroleum Exporting Countries on Wednesday cut its estimate for growth in global demand of oil, citing an increasingly uncertain outlook for the world economy.
The updated forecasts, published in the organization’s monthly report, come a week after the cartel and its Russian-led allies agreed to cut their production target by 2 million barrels a day beginning in November. The output cut angered the Biden administration and has strained relations between the U.S. and Saudi Arabia, OPEC’s de facto leader.
OPEC forecast oil demand to grow by 2.64 million barrels a day, or mb/d, this year, down from 3.1 mb/d in its September report. Growth in 2023 is now seen at 2.34 mb/d versus last month’s estimate of 2.7 mb/d.
In the report, OPEC said “risks are skewed to the downside, with slowing growth in the global economy, if continued, likely leading to lower oil demand in the months to come. While the first half of the year saw good levels of mobility, industrial activity and petrochemical feedstock requirements, the momentum has seen a slowdown due to reduced economic activity in recent months.”
OPEC forecast total non-OPEC liquids production to grow by 1.93 mb/d in 2022 down from its previous estimate of 2.11 mb/d. In 2023, its expected to grow by 1,52 mb/d versus a September estimate of 1.73 mb/d.
West Texas Intermediate crude for November delivery
CL.1,
CLX22,
the U.S. benchmark, rose 28 cents, or 0.3%, to $89.63 a barrel on the New York Mercantile Exchange. December Brent crude
BRN00,
BRNZ22,
the global benchmark, was up 42 cents, or 0.4%, at $94.71 a barrel on ICE Futures Europe.
Crude futures bounced back sharply last week from eight-month lows after OPEC announced the production cut, though the actual reduction is expected to be about half the 2 million barrel figure since several members were already producing well below their targets.
The reduction was still seen as substantial amid tight global supplies.
