In its latest monthly report, OPEC has revised down its forecast for global oil consumption in 2024, projecting an increase of 1.8 million barrels per day, which is 107,000 barrels less than previously anticipated. This follows the organization's pattern of lowering its demand growth estimates for the current and next year due to weaker-than-expected consumption in Asia and Africa.
Despite the downgrades, OPEC remains more optimistic than other forecasters, including the International Energy Agency (IEA) and major financial institutions. OPEC's October oil production stood at 26.535 million barrels per day, slightly up from September's 26.069 million barrels. Saudi Arabia's output was relatively stable at 8.968 million barrels per day in October.
Market attention is also focused on potential shifts in U.S. policies with the return of President-elect Trump, who has previously imposed strict trade tariffs and curtailed Iranian oil exports, affecting the oil market dynamics. Trump's past criticisms of OPEC for maintaining high oil prices still echo in market sentiments.
International oil futures have declined approximately 18% since July, with traders increasingly believing Middle Eastern conflicts will not significantly disrupt oil exports. OPEC has cut its 2023 oil demand growth forecast by nearly one-fifth, as oil prices remain sluggish.
The OPEC+ alliance, deferred its production increase plans twice under Saudi leadership, is scheduled for a review on December 1, with a moderate monthly output hike anticipated at the beginning of next year. Analysts at Bank of America noted that OPEC+ faces tough decisions as non-OPEC oil supply is set to rise by 1.4 million barrels per day next year and 900,000 barrels per day in 2026.
Meanwhile, some OPEC+ nations, like Kazakhstan and Iraq, are adjusting their production levels, aligning closer to their quotas. Kazakhstan's production fell below its quota in October due to maintenance at the Kashagan oil field, and Iraq has gradually reduced its output, though still slightly above target. Russia's production also exceeded its OPEC+ agreement by 42,000 barrels per day in October.
Oil prices saw a marginal increase recently, with WTI December futures up by $0.08 to $68.12 per barrel and Brent January futures rising $0.06 to $71.89 per barrel. The IEA is set to release its latest monthly global oil market assessment, considering the shift towards electric vehicles and a reduction in fossil fuel dependence as part of global climate change mitigation efforts.
