LONDON: OPEC on Monday said oil market fundamentals remained strong and blamed speculators for a drop in prices as it slightly raised its 2023 forecast for global oil demand growth and stuck to its relatively high 2024 prediction.
Oil has weakened to around $82 a barrel for Brent crude from a 2023 high in September near $98. Concern about economic growth and demand has pressured prices, despite support from supply cuts by OPEC and its allies, and conflict in the Middle East.
But the Organization of the Petroleum Exporting Countries in a monthly report said the market was healthy despite “exaggerated negative sentiments”, citing strong Chinese imports, minor downside risks to economic growth and a robust physical oil market.
“Recent data confirms robust major global growth trends and healthy oil market fundamentals,” OPEC said in a feature article at the start of its report.
“Oil prices have trended lower in recent weeks, mainly driven by financial market speculators.”
OPEC oil output rises for third month
In the report, OPEC nudged up its forecast for world oil demand growth in 2023 to 2.46 million barrels per day (bpd), up 20,000 bpd from the previous forecast. In 2024, OPEC sees demand rising by 2.25 million bpd, unchanged from last month.
A lifting of pandemic lockdowns in China has helped oil demand rise in 2023. OPEC has consistently forecast stronger demand growth for next year than other forecasters such as the International Energy Agency.
This is the last report before OPEC and its allies, known as OPEC+, meets on Nov. 26 to set policy. The group has been cutting production since late 2022 to support the market and its latest agreement calls for output curbs throughout 2024.
OPEC output rises
The OPEC report also said OPEC oil production rose in October despite the pledged supply cuts, driven by increases in Iran, Angola and Nigeria.
Iran, exempt from OPEC supply cuts because of U.S. sanctions, has been boosting output in 2023 in a trend that analysts say appears to be the result of Iran’s success in evading the sanctions and U.S. discretion in enforcing them.
Nigeria and Angola have been recovering from internal challenges that limited their output.
But in the feature article about the oil market’s underlying strength, OPEC observed that Nigeria’s oil output, as well as that of the 11 members subject to output limits, remained below their output targets.
OPEC also cited a strong physical crude markets as a further sign of market health.
“The robust physical crude market is further reflected in the strong crude differentials seen in almost all regions in October and continued in early November,” OPEC said.