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OPEC Raised Annual Crude Oil Demand Forecast

The Organization of Petroleum Exporting Countries OPEC released its monthly Oil Market Report Tuesday morning and raised its forecast for demand growth in 2013 to 89.7-M BPD, a rise of 800,000 BPD from the prior forecast.

The cartel said that colder-than-normal temperatures and a better economic outlook gave rise to the increase, 50% the increase is assigned to China, where demand has grown for the past 4 months.

On the supply side, OPEC forecasts non-cartel supplies to increase by 940,000 BPD to an average of 53.92-M BPD in Y 2013. The bulk of the increase is coming from North and South America, while supplies from Europe primarily the North Sea are expected to decline.

OPEC production totaled 30.32-M BPD in January, with Iraq now the 2nd largest producer in the cartel with just over 3-M BPD.

OPEC members do not reveal their own production figures, but use instead secondary sources. The cartel forecasts Y 2013 demand for OPEC crude at 29.8-M BPD, a decline of 300,000 BPD from Y 2012 average demand and a drop of 100,000 BPD from last month.

Prices are somewhat lower for OPEC’s reference basket of crude, at 109.28 bbl, down from an average of 111.76 a barrel last year.

For the month of January, the OPEC basket is about 2.75 a bbl higher than January 2012. Brent Crude is about 2.50 bbl more than in January 2012, and West Texas intermediate WTI is up more than 6.50 bbl.

Expected improvement in the global economy, coupled with Tuesday’s OPEC report, is pushing Crude Oil prices higher today. Brent is up about 0.1% and WTI is up about 0.5% at this writing.