OPEC expects tighter oil market with lower supply and higher demand

(Bloomberg) – OPEC expects a slightly tighter global oil market than previously forecast as the group nudged up its demand estimate and trimmed its supply outlook.

The Organization of Petroleum Exporting Countries raised its projection for the amount of crude it will need to pump this year by 250,000 bpd to an average of 29.42 MMbpd, it said in a monthly report. Based on OPEC’s current output rates, markets are set to be broadly balanced this year.

The OPEC+ alliance has indicated it plans to stick with production quotas fixed late last year for the rest of 2023, even as China’s economy reopens and Russia cuts output in retaliation for Western sanctions. The United Arab Emirates energy minister reiterated on Tuesday that world crude markets are balanced as rising demand in some regions is countered by a slowdown elsewhere.

“Key to oil demand growth in 2023 will be the return of China from its mandated mobility restrictions,” OPEC said. “Concern hovers around the depth and pace of the country’s economic recovery.”

Global oil consumption will increase by 2.3 MMbpd — or 100,000 a day more than projected a month ago — to an average of 101.87 MMbpd this year, OPEC said. OPEC reduced its estimate for supplies outside the group in 2023 by 150,000 bpd to 67 MMbpd.

OPEC’s 13 members pumped an average of 28.88 MMbpd in January, little changed from the previous month, the report showed.