OPEC raises view on 2015 oil demand

The Organisation of the Petroleum Exporting Countries will need to hike production to meet the world’s increased thirst for oil in 2015 and 2016 amid lower supplies from outside its own ranks, according to an internal report.

According to OPEC’s October Oil Market Report, world crude demand was set to grow by 1.5m barrels a day this year, and reach 92.86 mb/d, and by another 1.25 mb/d next year.

The forecast for 2015 marked an upwards revision of 40,000 barrels a day.

However, supplies from outside the cartel were now seen growing by 720,000 mb/d this year, 160,000 less than before – on the back of a lower projection for US output.

Non-OPEC supplies were now seen shrinking by 130,000 b/d in 2016.

The oil cartel was now seen having to pump out 300,000 b/d more or 29.6 mb/d in 2015. Demand from OPEC was seen rising to 30.8 mb/d next year.

So-called ‘forward cover’ for OECD countries, a measure of commercial oil stocks’ ability to make up for a shortfall in supplies, stood at 63.3 days in August, some 4.5 days higher than the five-year average, OPEC said in a statement.

As of 15:07 front month Brent crude futures were off by 1.48% to $51.87 per barrel on the ICE.

Fundamentals for price gains not yet in place, analysts say

Despite recent price gains, in a research report sent to clients on Monday Barclays said that: “Crude prices have moved higher this week on the expectations that supply adjustments are under way and on bullish sentiment from two industry conferences in New York and London.

“Yet doubts remain whether the patient has walked out of the doctor’s room before being fully treated. Though we perceive a sentiment shift, the physical indicators are not yet convincing, and a repeat of Q2 where a swift price rally slowed the balancing process risks happening again.”