OPEC sees greater demand for its own crude, as Hurricane Ida keeps US oil output down

Barring a substantial increase in OPEC crude production in the coming months, the oil market will tighten considerably, the organization said Oct. 13, citing the lingering impacts of Hurricane Ida on US oil production, along with field maintenance and outages in Kazakhstan and Canada.

In its closely watched monthly market outlook, OPEC lowered its estimate of oil supplies from outside the bloc in 2021 by 210,000 b/d from its previous forecast to 63.64 million b/d.

Global oil demand was lowered by a lesser amount to 96.60 million b/d.

As a result, the call on OPEC's own crude production for 2021 was revised up to 27.80 million b/d, including 29.36 million b/d in the fourth quarter.

That is significantly above OPEC's output of 27.33 mil b/d in September, according to secondary sources used by the organization to track output.

So far, however, OPEC has not indicated it plans to pump up to the fourth quarter call on its crude. The group and its allies, in a coalition known as OPEC+, agreed in July to hike their collective output by 400,000 b/d each month, of which about 250,000 b/d has been allocated to OPEC.

S&P Global Platts has assessed Dated Brent at three-year highs in recent days, with the benchmark reaching as high as $84.43/b on Oct. 11.

The rally has prompted the US to call on the producer bloc to release more crude into the market to cool off prices – a request rebuffed by OPEC and its allies in their meeting Oct. 4, when they agreed to stick with their 400,000 b/d increase for November.

The group will next meet Nov. 4 to decide on December output levels.

World oil demand is expected to increase by 5.8 million b/d to 96.60 million b/d in 2021, revised down from 5.96 million b/d growth seen last month, "mainly driven by lower-than-expected actual data for the first three quarters of this year," OPEC said.

The expected growth in demand for 2022 was left unchanged at 4.15 million b/d, to 100.76 million b/d, essentially a return to pre-pandemic levels. However, seasonal factors in the winter and spring means that most of the demand growth will be concentrated in the second half of the year.

"Demand is anticipated to be supported by healthy economic momentum in the main consuming countries and better management of the COVID-19 pandemic," OPEC said.

Non-OPEC supply in 2022 was forecast at 66.66 million b/d, growth of 3.02 million b/d from 2021.

OPEC expects the call on its own crude to rise to 28.80 million b/d for 2022.