OPEC forecast higher demand for its oil in 2018 and said Oct. 11 its production-cutting deal with rival producers was successfully getting rid of a glut, pointing to a tighter global market that could move into a deficit next year.
In a monthly report, OPEC said the market could find support in winter from low distillate fuel stocks and forecasts of colder weather, which would boost distillates demand for heating
OPEC said the world would need 33.06 million barrels per day (bbl/d) of its crude next year, up 230,000 bbl/d from its previous forecast. That is its third consecutive monthly increase in the projection from its first estimate made in July.
The report illustrates the growing confidence of OPEC officials that its supply cut is working. Oil has found support from the deal but, trading below $57/bbl on Oct. 11, crude is still half its mid-2014 level.
"With the market moving into the winter season, distillate fuel supplies are notably tight, representing a change from the excess supplies seen in the last two years," OPEC said in the report.
"OPEC and key non-OPEC oil producers continue to successfully drain the oil market of excess barrels."
In a deal aimed at clearing the glut, OPEC is curbing output by about 1.2 million bbl/d, while Russia and other non-OPEC producers are cutting half as much, until March 2018.
The 14-country producer group said its oil output in September, as assessed by secondary sources, came in below the demand forecast, even though output climbed slightly.
The figures mean OPEC has complied 98% with the cutback pledge, according to a Reuters calculation, up from 83% initially reported in August as the September rise was led by Nigeria and Libya which are exempt from the cut.
OPEC said it pumped 32.75 million bbl/d in September, up about 89,000 bbl/d from August. Should OPEC keep pumping at similar levels to September, the market could move into a deficit next year, the report indicates.
In a further sign that the supply excess is easing, OPEC said inventories in developed economies declined by 24.7 million bbl in August to 2.996 billion bbl, 171 million bbl above the five-year average.