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The oil market will stay well supplied and an overhang of stocks will be more than sufficient to meet any extra demand next year, OPEC said today, suggesting there was no need for more OPEC production for some time.
The Organization of the Petroleum Exporting countries cut its estimate of demand for its own crude oil this year, saying supply from countries outside the producer group will rise more than expected and it forecast only a small increase in demand for its oil next year.
"The overall outlook indicates that the current stock overhang would be more than sufficient to supply the additional volumes needed in 2011," said OPEC, which pumps more than one in every three barrels of oil, in its Monthly Oil Market Report.
"As a result, the oil market is set to remain well supplied, especially in the light of the ongoing increase in oil production capacity," the report said.
The OPEC report leaves little room for more supplies from the producer group. It is much more cautious in its estimate of global oil demand than the International Energy Agency (IEA), which says world oil demand next year will be almost 1.5 million barrels per day (bpd) higher than OPEC's forecast.
The producer group has kept its formal output policy unchanged since announcing a record supply cut in December 2008. It is next scheduled to meet to review policy in October.
The report kept its forecast for world oil demand growth this year steady at 950,000 bpd, seeing global consumption at 85.36 million bpd. In 2011, it expects oil demand to rise by 1.05 million bpd to 86.41 million bpd.
The group said crude oil production from countries not in OPEC will jump by 740,000 bpd this year, 100,000 bpd more than previously forecast.
But it cut its forecast for demand for its own crude oil this year by 110,000 bpd to 28.66 million bpd and said the call on its oil would only rise to 28.84 million bpd next year.
"It suggests there is not much chance of OPEC increasing oil production any time soon," said Carsten Fritsch, analyst at Commerzbank in Frankfurt. "The report is very conservative -- much less bullish than the IEA."
The IEA, adviser to more than two dozen of the big developed consuming countries, said on Tuesday oil demand would grow 1.77 million bpd this year and by 1.35 million bpd next year to 87.84 million bpd.
If demand for OPEC oil does increase next year, as forecast, it will be the first rise for three years after financial crisis, recession and economic slowdown curbed fuel consumption worldwide.
Despite the lower expectations of demand for OPEC crude, OPEC members' production has been creeping higher.
OPEC members with output quotas, all except Iraq, met just 52 per cent of their targeted 4.2 million bpd cuts in June, down from around 54 per cent in May, according to Reuters calculations based on the OPEC data.
Reuters
