By Alexander Kwiatkowski
Bloomberg) -- The Organization of Petroleum Exporting Countries said it will need to pump less crude than previously thought this year as production from outside the group increases more than forecast.
OPEC, which produces about 40 percent of the world’s oil, estimates members will need to produce 28.77 million barrels of crude a day to satisfy demand for the year, according to its monthly oil market report. That’s about 70,000 barrels a day fewer than last month’s projection. The producer group left its forecast for world oil demand for this year unchanged.
“This would leave no room for additional crude oil supplies in the market,” the Vienna-based secretariat said in a monthly report today. “Oil market fundamentals continue to be impacted by the persistent overhang in supply.”
OPEC agreed in March to uphold existing output quotas for a fifth time since 2008. Ministers have said the group is unlikely to alter limits this year as supplies remain ample and oil trades at levels deemed to be satisfactory. Crude will likely remain near its “ideal” price of $75 a barrel, Saudi Arabian Oil Minister Ali al-Naimi said in an interview with consultants Petroleum Policy Intelligence, published earlier this week.
A higher outlook for production from outside OPEC means the world will require less of its crude than previously thought. Non-OPEC oil supply is forecast at 51.78 million barrels a day for this year, 110,000 barrels a day more than forecast in last month’s report, and an increase of 640,000 barrels from 2009.
The estimate was increased after actual production figures for the first and second quarters were higher than anticipated, according to the group. North American supplies saw the biggest revision in the first quarter while developed economies drove the increase in the second quarter, it said.
High Risk
“The associated risk and uncertainties in the forecast are on the high-side given the current global market situation as well as the factors influencing supply,” according to OPEC. The report did not cite the effect of drilling restrictions in the Gulf of Mexico following the Deepwater Horizon oil spill on April 20.
The U.S. government yesterday reduced its forecast for Gulf of Mexico output by 26,000 barrels a day in the fourth quarter of the year and 70,000 barrels a day in 2011 after the spill.
OPEC estimates that global oil demand will average 85.37 million barrels a day this year, an increase of 950,000 barrels a day, or 1.1 percent, from 2009. That is unchanged from last month’s report.
“With half of the year already passed, economic signs are not that rosy; nevertheless hope remains,” according to the monthly report. “Despite the weak economic recovery, future economic prospects are pushing world GDP to a positive side, which will support world oil demand.”
Compliance
Compliance among the 11 OPEC states bound by quotas was unchanged at 53 percent in May, as lower production from Angola, Iran, Libya and Algeria offset rising output from Venezuela, the U.A.E. and Nigeria, according to the report.
The 11 nations, excluding Iraq, pumped 26.83 million barrels a day last month, compared with 26.81 million barrels a day in April, OPEC said, citing secondary sources.
Production from all 12 OPEC members increased 141,000 barrels a day in May to 29.26 million barrels, as Iraq boosted output by 121,300 barrels a day, the secretariat said.
OPEC’s 12 members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. The organization’s next meeting is scheduled for Oct. 14 in Vienna.
--Editors: Raj Rajendran, Steve Voss.
To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
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