OPEC has lowered its oil output further and is pumping less than this year’s global need for its crude, the exporter group said, underlining the toll that outages in Libya and elsewhere are taking on production.
The monthly report from the Organization of the Petroleum Exporting Countries kept unchanged its global supply and demand forecasts, which point to a smaller market share for OPEC in 2014 due to increasing supply from non-OPEC countries.
But OPEC, which pumps a third of the world’s oil, is relatively upbeat on economic prospects, seeing faster growth in 2014 of 3.5 per cent, up from 2.9 per cent in 2013 as monetary stimulus continues.
“Further advances throughout the year could be possible, but some downside risk remains,” said the report by economists at OPEC’s headquarters in Vienna.
For now, OPEC expects demand for its crude oil in 2014 to average 29.58 million barrels per day (bpd), virtually unchanged from the previous estimate.
According to secondary sources cited by the report, OPEC lowered its own output to 29.44 million bpd in December, below this year’s forecast demand.
This suggests there will no surplus crude in the market in 2014 should OPEC keep output at December’s rate, although that is unlikely should output recover in Iraq, Libya and Iran.
Already in 2014, Libya’s output has partly recovered after being curbed for months by protests and strikes and Iran’s deal with Western powers over its nuclear programme has raised the prospect of higher oil exports.
Rising output would require output cuts from top OPEC exporter Saudi Arabia, say analysts. Riyadh pumped at a record rate above 10 million bpd in 2013 to compensate for outages and has since throttled back.
According to secondary sources cited by OPEC’s report, Riyadh cut back its output to 9.62 million bpd in December, while Saudi Arabia told OPEC it raised supply to 9.82 million bpd.
OPEC has yet to see any uptick in global oil demand. It expects world consumption to rise by 1.05 million bpd in 2014, virtually unchanged and less than the increase in supply from countries outside the group.
Another closely watched report on global oil supply and demand, from the International Energy Agency which advises industrialised countries, is due on Tuesday.