Opec expects stronger demand for its crude oil next year due to stronger consumption growth and lower estimates for supply from outside the cartel, as prices near $50 a barrel boost driving and crimp output.
The cartel’s monthly market report said its in-house analysts see demand for Opec’s oil reaching 33.1m barrels a day in 2018, up by roughly 200,000 barrels per day from last month’s forecast with the increase largely split between stronger demand and lower estimates of non-Opec supply.
The increase comes as the 14-member group prepares to meet in Vienna next month to decide whether to roll over output curbs, also followed by large producers such as Russia, which have been in place since January.
The cartel is widely expected to extend the cuts beyond next March to continue drawing down excess stocks built up since 2014, when prices first crashed from above $100 a barrel due to surging US shale output.
Brent crude, the international benchmark, has risen more than 25% since June to trade near $57 a barrel, lifted by stronger demand and slightly lower forecasts for US shale growth.
Goldman Sachs analysts said yesterday that while stock draws may slow after big drops in the third quarter of 2017, they believe Opec and Russia will work to keep the output deal in place.
“We expect Opec will act to preserve normalised inventories as long as it doesn’t lose market share and revenues, which we view as achievable in 2018.” analyst Damien Courvalin said.
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Statoil has reported that a new discovery in the North Sea could contain up to 130 million barrels of oil. The Norwegian group said at least 25 million recoverable barrels had been proven in the immediate vicinity of the Verbier sidetrack well in the outer Moray Firth.
It added there could be “significant remaining potential” in the basin. Statoil plans further appraisals to determine the exact size of the find. It will also assess the commercial viability of the discovery.
Jez Averty, a senior vice president at Statoil, said: “This is an encouraging result for Statoil and the UK team.”
“We have proven oil in good quality sands with good reservoir properties, but significant work remains, most likely including appraisal, to clarify the recoverable volumes and to refine this range.”