OPEC has trimmed its crude oil output towards next year’s global requirement, the exporter group said on Tuesday, further whittling away at a supply surplus that could weigh on prices.
The monthly report from the Organization of the Petroleum Exporting Countries, which kept its output policy unchanged at a meeting last week, also sounded an upbeat note on the prospects for the world economy in 2014.
“Signs of a recovery are already visible in rising global industrial production,” OPEC said. “The global economy has gained traction again.”
The report kept unchanged forecasts which point to a smaller share of the world oil market for OPEC in 2014 due to increasing supply from the United States, in the midst of a shale energy boom, and other non-OPEC countries.
OPEC expects demand for its oil in 2014 to average 29.57 million barrels per day (bpd), maintaining its previous estimate. According to secondary sources cited by the report, OPEC lowered its own output to 29.63 million bpd in November, closer to next year’s forecast demand.
That suggests there will be virtually no surplus crude in the market in 2014 should OPEC keep output at November’s rate. The amount of excess oil has fallen from earlier this year when OPEC output was well above 30 million bpd.
Involuntary outages, as opposed to elective cutbacks, are taking their toll on OPEC output. Libya’s output fell the most of the 12 OPEC members last month due to strikes and protests. Oilfield maintenance in Nigeria and a cutback in Saudi Arabia also reduced supply.
Despite the upbeat note on global growth, OPEC has yet to see any uptick in oil demand. It expects world consumption to rise by 1.04 million bpd in 2014, unchanged and less than the 1.2 million bpd increase in non-OPEC supply.
OPEC met on Dec. 4 in Vienna to decide whether to change its nominal production target of 30 million bpd. With oil prices comfortably above OPEC’s desired level of $100 a barrel, it left the target unchanged, as expected.
Two other government reports on global oil supply and demand are due this week. The U.S. Energy Information Administration issues its report later on Tuesday and International Energy Agency, adviser to industrialised countries, on Wednesday.