OPEC says recent market slump 'overblown', with oil demand still robust

Oil market fundamentals are still strong, with healthy demand ahead, OPEC said in its latest outlook Nov. 13, blaming the recent slump in crude prices on speculators and their "exaggerated negative sentiments."

OPEC pointed to sturdy economic growth in the US and China, and slightly revised up its demand growth forecast for 2023 by 20,000 b/d to 2.46 million b/d.

As such, it estimated the so-called call on its crude for the fourth quarter at 3 million b/d higher than its production in October, which averaged 27.9 million b/d, according to an average of available secondary sources, including the Platts OPEC+ survey by S&P Global Commodity Insights.

With OPEC and its allies having declared they will maintain their current production quotas, including deep voluntary cuts by Saudi Arabia, through at least the end of the year, the market should tighten significantly, if the producer group's forecast holds.

Quarterly calls on OPEC crude in 2024 are also well above current production.

"Recent data confirms robust major global growth trends and healthy oil market fundamentals," OPEC said in its report, pointing to Chinese crude imports, which are on pace to reach a new annual record in 2023.

It criticized the "overblown negative sentiment" regarding Chinese economic data and said the decline in oil prices was "mainly driven by financial market speculators."

The call on OPEC crude represents the amount that the group, which bills itself as the global market's swing producer, would be required to pump to balance supply with demand, without drawing into inventories.

For the full-year 2023, OPEC estimated the call on its crude at 29.1 million b/d -- 600,000 b/d higher than in 2022 -- rising to 29.9 million b/d in 2024.

Amid the market slump, Saudi Arabia, alongside its key OPEC+ ally Russia, said it will continue its policy of major production cuts. Saudi Arabia has committed to a 1 million b/d voluntary cut on top of its agreed OPEC+ quota through the end of 2023, while Russia has said it is cutting its oil exports by 300,000 b/d.

They have said that they will review their production levels in December, and could even deepen the cuts, if market conditions warrant.

Representatives of all OPEC+ participants are also scheduled to meet Nov. 26, to discuss market conditions and overall production quotas under the deal.

OPEC's ongoing optimism on demand for its crude comes despite a further upward revision to its estimates of non-OPEC supply growth in 2023. It has increased its estimates for non-OPEC supply every month since July.

It now sees 2023 non-OPEC supply growth up 100,000 b/d to 1.8 million b/d, on upward revisions to Russia and the US. It maintained its estimate of 2024 non-OPEC supply growth at 1.4 million b/d.

OPEC sees the US, Brazil, Norway, Kazakhstan, Guyana and China supporting growing supply outside the bloc.

The group estimated OECD commercial oil stocks at 2.783 billion barrels as of September -- down 15.6 million barrels from the August, and 118 million barrels below the latest five-year average.