Under fire for reining in production as prices surge, OPEC on Nov. 11 downgraded its 2021 global oil demand forecast by 160,000 b/d, citing weaker economic factors in China and India, but indicated the market would remain tight through the rest of the year.
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Demand for OPEC crude is projected to average 29.57 million b/d over the fourth quarter, far higher than the bloc's output of 27.45 million b/d for October, the organization said in its closely watched oil market report.
Even with OPEC planning to hike production in concert with Russia and eight other allies by a combined 400,000 b/d each month, the volumes would not be enough to satisfy global demand, with the US, Japan and India among consuming countries complaining for the group to release more supplies.
But in the first quarter of 2022, seasonal factors will drive down the call on OPEC crude to 26.81 million b/d, the report stated, and ministers have said they would prefer to be cautious than aggressive on production, with a likely market surplus coming.
The alliance next meets Dec. 2 to decide on January production levels.
OPEC and its allies "will continue to review the market conditions on a regular basis, reaffirming the participating countries' commitment to ensure adequate supply and support efforts to maintain global oil market stability," the report stated.
In its analysis, OPEC noted a 12% rise in crude oil spot prices in October, attributed to "strong oil market fundamentals, compounded by expectations of higher oil demand in the winter months from 'gas to oil switching.'"
Robust demand as the world continues to recover from the pandemic has shrunk OECD commercial oil stocks to 2.805 billion barrels, about 163 million barrels lower than the 2015-19 average that the OPEC+ alliance has said it is targeting.
However, the report pointed out that China has reinstituted lockdown measures in some areas to contain growing COVID-19 cases, while cost-conscious Indian consumers are likely to ease back on oil use amid surging prices.
As a result, OPEC now expects global oil demand to average 96.44 million b/d in 2021, for year-on-year growth of 5.65 million b/d. For 2022, demand will rise by 4.15 million b/d, unchanged from last month's forecast, to hit 100.59 million b/d.
Its forecasts for non-OPEC production were unchanged from last month's report, at 63.64 million b/d for 2021, up 660,000 b/d year-on-year, and 66.66 million b/d for 2022, up 3.02 million b/d.
The report also continues to indicate that many OPEC members are struggling to hit their production quotas, which has contributed to the recent market tightness.
For example, Angola self-reported October crude production of 1.11 million b/d, far below its allocation of 1.36 million b/d, while Nigeria self-reported 1.23 million b/d, well under its cap of 1.63 million b/d.
OPEC kingpin Saudi Arabia said it pumped 9.78 million b/d, according to the report, just shy of its quota of 9.81 million b/d.