Global demand for oil is now expected to grow more than previously estimated, according to the Organization of the Petroleum Exporting Countries monthly report released on Tuesday.
OPEC will have to provide an average of 29.8 million barrels a day in 2013, or 100,000 a day more than it estimated a month ago. The oil producer organisation’s output in January was 500,000 barrels a day larger than this, at 30.3 million.
Global oil demand will increase by 800,000 barrels a day, or 0.9 percent, to 89.7 million a day, OPEC said. That marks an increase of 80,000 barrels a day from last month’s report.
The forecast for world oil demand growth in 2013 has been revised up due to signs of recovery in the global economy and colder weather at the start of this year. The bulk of the growth is seen coming from China. The country is expected to account for 400,000 barrels a day of this year’s growth.
Brent traded at $118.60 on the London-based ICE Futures Europe exchange today. If the economic situation continues to brighten up, then there’s a good chance of seeing Brent oil prices higher than $128, oil traders believe.
Brent crude futures have advanced 6.7 percent in the year so far amid signs of economic recovery in the U.S., China’s advance, and news that Europe has withstood the worst of its debt crisis.
OPEC’s 12 members trimmed production last month by 21,000 barrels a day to 30.32 million a day, according to the report. That leaves output 320,000 barrels a day higher than the collective target of 30 million that the group’s 12 members reaffirmed at their most recent meeting in December. Saudi Arabia, the group’s biggest member and de facto leader, curtailed supplies by 75,800 barrels a day in January to 9.1 million a day.
OPEC Secretary-General Abdalla El-Badri said at a conference in London on Jan. 28 that there is no need for OPEC to restrain production if major economies appear to be struggling and that he does not anticipate any collapse in prices this year.
The organization kept its estimates for production from outside the group in 2013 unchanged. Non-OPEC producers, such as the U.S., Canada and Brazil, will boost supplies by 900,000 barrels a day to 53.9 million.
OPEC comprises Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. The organization is scheduled to meet next in May.
