Tag Archive for: opec

OPEC has kept its global oil demand growth forecasts unchanged for 2025 and 2026, expecting continued robust economic growth to drive demand.

OPEC remains upbeat on global oil demand growth

OPEC remains upbeat and bullish on global oil demand growth for this year and next as it continues to unwind its crude production cuts.

The cartel kept unchanged its 2025 and 2026 oil demand growth forecasts in its closely-watched Monthly Oil Market Report (MOMR) for October published on Monday.

In the report, OPEC expects global oil demand to grow by about 1.3 million barrels per day (bpd) this year from 2024, and reach on average 105.1 million bpd, reflecting continued robust economic growth. The view, unchanged from last month’s report, is driven by expectations of 1.2 million bpd demand growth in China, India, and other Asian markets.

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Source: Oil Price

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Goldman Sachs expects OPEC+ to make its final production hike in August at the now standard level of 411,000 barrels daily.

Goldman expects OPEC+ output hikes to end in August

Goldman Sachs expects OPEC+ to make its final production hike in August at the now standard level of 411,000 barrels daily.

In a recent analysis, the bank highlighted the current dynamics of the oil market, indicating that the fundamentals surrounding oil supply and demand remain relatively robust. Despite ongoing concerns about a potential slowdown in global economic activity, recent data has shown stronger-than-expected performance in various sectors. This resilience in hard global activity metrics, coupled with the seasonal uptick in oil demand typically associated with the summer months, suggests that any anticipated decline in oil consumption is unlikely to be severe enough to warrant a significant reduction in production levels. As such, market participants are closely monitoring these trends, particularly in light of the upcoming decision on production levels scheduled for July 6th.

Furthermore, the interplay between these factors may lead to a reconsideration of strategies among oil-producing nations as they evaluate their output in response to both market signals and geopolitical considerations. The bank’s insights imply that while cautious optimism prevails, the potential for a sustained increase in production remains on the table. Producers may view the current environment as an opportunity to capitalize on existing demand, thus influencing pricing and supply dynamics in the coming months. This perspective underscores the importance of closely watching economic indicators and seasonal patterns as they impact the broader oil market landscape.

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Source: Oil Price

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OPEC projects

OPEC projects robust oil demand growth for 2025 and 2026

The Organization of Petroleum Exporting Countries (OPEC projects) has released its latest Monthly Oil Market Report (MOMR) that covers major issues affecting global oil markets and provides the outlook for crude oil market developments. OPEC has reiterated its earlier forecast that global oil demand will expand at a robust clip at 1.4 mb/d in 2025, largely driven by strong non-OECD (Organization for Economic Co-operation and Development) growth. OPEC sees non-OECD demand growth clocking in at 1.3 mb/d, compared with just 0.1 mb/d for the 38-member international alliance. According to OPEC, this robust demand will continue in 2026 with global oil demand forecast to grow by 1.4 mb/d Y/Y. Again, non-OECD countries will do the heavy lifting with demand growth expected to come in at 1.3 mb/d vs. 0.1 mb/d for OECD.

On the supply side, OPEC has forecast non-DoC liquids supply (i.e., liquids supply from countries not participating in the Declaration of Cooperation) to grow by 1.1 mb/d Y/Y in 2025, mainly driven by production growth in the United States, Brazil, Canada, and Norway. Non-DoC liquids supply growth in 2026 is expected to clock in at 1.1 mb/d, mainly driven by the U.S., Brazil and Canada. Meanwhile, DoC supply of natural gas liquids (NGLs) and non-conventional liquids are forecast to grow by about 90 tb/d Y/Y in 2025, to average 8.4 mb/d, and by 0.1 mb/ Y/Y in 2026 to average 8.5 mb/d.

The Declaration of Cooperation (DoC) is a loosely coupled organization that started in 2016. It constitutes the coordination between OPEC member countries with 11 non-OPEC oil producing countries (now 10 – Equatorial Guinea became an OPEC Member in May 2017) in a concerted effort to stabilize the global oil market. DoC was effective for an initial period of six months, but has been extended multiple times thanks to its success.

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Source: Oil Price

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OPEC+ made no changes to plans to start gradually reviving oil production towards the end of the year, despite signs of an impending surplus.

OPEC+ remains committed to reviving production despite possible surplus

A statement from 23-nation the group after an online monitoring meeting on Wednesday didn’t announce any alterations. Led by Saudi Arabia and Russia, OPEC+ plans a series of monthly increases beginning with a 180,000 bpd hike in December — two months later than originally scheduled because of fragile market sentiment.

Oil prices have rallied more than 5% in the past two days after Iran, an OPEC member, launched strikes against Israel in an escalation of the Middle East’s year-long conflict. But at around $75 a barrel, prices remain 14% down from July as traders focus on weak demand in China and swelling supplies from the Americas.

While the retreat offers relief to consumers after years of rampant inflation — and for central banks as they pivot to lowering interest rates — it poses a financial threat to the Organization of Petroleum Exporting Countries and its allies.

Saudi Arabia slashed growth forecasts this week and projected deeper budget deficits than previously estimated as the cost of efforts to overhaul the kingdom’s economy outpaces revenue. Russia, meanwhile, relies on energy income to finance President Vladimir Putin’s war against Ukraine.

JMMC meeting

The JMMC meeting on Wednesday mainly focused on the failure of Iraq, Kazakhstan and Russia. It is for the implementation of their agreed cutbacks, according to delegates who asked not to be identified.

While the countries “reiterated their strong commitment” to the agreement, they mostly continue to pump above their output quotas. They haven’t yet started extra cutbacks pledged as compensation for cheating. The countries held individual workshops to discuss output levels in September.

OPEC+ plans to restore roughly 2.2 MMbpd in monthly tranches between December and late 2025, and allow the United Arab Emirates to make an extra hike in recognition of its increased production capacity.

The alliance has several more weeks to decide whether to go ahead with the December increase. Ministers are scheduled to gather on Dec. 1 to review policy for next year.

With oil markets poised to deteriorate further, analysts including JPMorgan Chase & Co. and Citigroup Inc. have expressed skepticism. It is that OPEC+ will press on with its scheduled supply increases.

Consumption is due to grow by less than 1 MMbpd in 2025. Supplies are set to swell by 50% more. It wil be leaving a glut even if OPEC+ continues to restrain output. This is according to estimates from the International Energy Agency.

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Source: Oil & Gas 360

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OPEC estimates that global oil demand rose by 2.4M bpd in 1Q24. For the full year, total world oil demand is anticipated to reach 104.5M bpd.

OPEC remains optimistic about global oil demand growth

A resilient global economy early this year has additional upside potential in the second half with the possible easing of monetary policies. OPEC said on Tuesday, keeping its 2024 and 2025 outlook of robust oil demand unchanged from last month. In its closely-watched Monthly Oil Market Report (MOMR) out today. OPEC maintained its forecast from the April report. Which sees global oil demand growth by 2.25 million barrels per day (bpd) this year. And by another 1.85 million bpd next year.

OPEC estimates that global oil demand rose by 2.4 million bpd in the first quarter of 2024. For the full year, total world oil demand is due to reach 104.5 million bpd. Driven by “strong air travel demand and healthy road mobility, including trucking, as well as industrial, construction, and agricultural activities in non-OECD countries.”’

Petrochemical capacity expansions in China and the Middle East are also set to boost demand growth this year, according to the cartel.

“The global economy showed resilience in 1Q24, with key economies demonstrating stable growth that, in certain instances, surpassed initial projections,” OPEC said.

The organization kept its world economic growth forecasts for 2024 and 2025 at 2.8% and 2.9%, respectively, but slightly raised its estimates of the U.S. economy this year and next. OPEC now expects the U.S. economy to grow by 2.2% this year, up from 2.1% in last month’s report, and by 1.9% next year, up by 0.2 percentage points compared to the April assessment.

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Source: Oil & Gas 360

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A surge of supply from non-OPEC nations like US, Brazil, and Guyana has surprised oil markets this year.

No matter how much OPEC cuts oil production, other countries will ‘fill the hole,’ trader says

Despite efforts by Saudi Arabia and Russia to prop up crude prices by cutting production, countries like Guyana, Brazil and the US have pumped more oil than ever.

That supply is now so strong that even if OPEC+ slashes more production, the spigot of oil from non-members will continue to douse the market.

“I think it’s more of a supply story going into 2024,” Rebecca Babin, senior equity trader for CIBC Private Wealth, told CNBC on Monday. “There’s a lot of fear that no matter what OPEC does, no matter how much they cut, there are producers — non-OPEC producers — that are just going to fill the hole they keep digging.”

She added, “We’re looking at 2024 and we’re concerned that the market is actually going to end up being oversupplied.”

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Source: yahoo!finance

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OPEC+ still has a positive outlook for growth in oil demand, despite the headwinds faced by the global economy, as it prepares for its next ministerial meeting.

OPEC+ remains positive on oil demand growth before meeting

Oil Demand Growth

OPEC+ still has a positive outlook for oil demand growth, despite the headwinds faced by the global economy, as it prepares for its next ministerial meeting.

“The economy, despite the challenges, is still doing quite well,” OPEC Secretary-General Haitham Al-Ghais said at the Argus European Crude Conference in London on Tuesday. “We are positive on demand, we’re still quite robust on demand.”

oil-demand-growth-opec-december-7-2018-reuters

Has Expressed Uncertainty

The top official at the Organization of Petroleum Exporting Countries (OPEC) has expressed uncertainty regarding the outcome of the group’s upcoming ministerial meeting, scheduled to take place in the final weekend of November. In a press statement, the official emphasized that it would be premature to make any definitive predictions or preempt the decisions that will be made during the meeting. This uncertainty regarding the outcome of the ministerial meeting reflects the complex and ever-evolving dynamics of the global oil market and the diverse interests of OPEC member countries.

Highlights the Organization’s Commitment

The statement made by the top OPEC official highlights the organization’s commitment to a consultative and consensus-driven decision-making process. OPEC, comprised of 13 member countries, plays a crucial role in shaping global oil prices and supply levels. The ministerial meetings serve as a platform for member countries to discuss and negotiate production quotas and strategies to stabilize the oil market. As such, these meetings often involve extensive deliberations and negotiations to reach a consensus that accommodates the interests of all member nations. Therefore, the official’s cautious approach in refraining from preempting the meeting’s outcome underscores the complexity and importance of the discussions that will take place amongst OPEC members.

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Source: Bloomberg

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Oil rose 1.4% after three weeks of declines set the stage for a relief rally. West Texas Intermediate settled above $78 a barrel Monday.

Oil stages relief rally after three straight weekly declines

Oil rose 1.4% after three weeks of declines setting the oil stages relief rally.

Oil prices experienced a notable recovery, surging by 1.4%, following a string of three consecutive weeks of declines. This upward movement in prices has sparked a sense of relief among market participants who have been closely monitoring the volatility in the oil market. The recent decline in oil prices had raised concerns and uncertainties about the future direction of the market, making this relief rally a welcomed development.

The three-week decline in oil prices was primarily driven by a combination of factors, including concerns over global economic growth, the ongoing trade tensions between major economies, and fears of a potential oversupply in the market. These factors had created a bearish sentiment, leading to a downward pressure on oil prices. However, the recent rally suggests that market sentiment is shifting, as investors are hopeful that the worst of the decline may be behind us.

The Positive sentiment in global equity markets

It is worth noting that the relief rally in oil prices is also supported by broader market dynamics. The positive sentiment in global equity markets, driven by a series of positive economic data and central bank stimulus measures, has contributed to the rebound in oil prices. Additionally, recent geopolitical developments, such as the easing of tensions in certain key regions, have also played a role in boosting investor confidence in the oil market.

Looking ahead, market participants will closely monitor key factors that could impact the future trajectory of oil prices. The ongoing trade negotiations between the United States and China, as well as developments in major oil-producing nations like Saudi Arabia and Russia, will be closely watched for any potential impact on oil supply and demand dynamics. Furthermore, any shifts in global economic growth expectations could also have a significant influence on oil prices.

Following three weeks of declines has provided a sense of relief for market participants. The rally supports positive sentiment in global equity markets, and geopolitical developments. There are hopes of a resolution to key trade tensions. However, the future direction of oil prices remains uncertain. This is as investors continue to monitor various factors that could influence market dynamics.

Weakening Demand Outlook

West Texas Intermediate settled above $78 a barrel Monday, snapping a rout that saw oil plummet more than 13%. A weakening demand outlook and rising US supplies continue to weigh on the market. With that, technical signals suggest the recent sell-off was overdone. Moreover, OPEC on Monday reiterated its view that global supply balances are tight and consumption healthy. As a result, this will be supporting prices alongside a weaker dollar.

“The futures market appears oversold,” RBC Capital Markets analysts including Michael Tran wrote in a note. Yet he cautioned that this rally may be short-lived. This is with investors persistently on edge about demand given stubbornly high US interest rates.

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Source: Bloomberg

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