Opec sticks to forecasts despite geopolitical risks

Opec's latest Monthly Oil Market Report (MOMR) indicated strengthening market stability, despite geopolitical risks, as Opec kept most 2018 supply and demand figures little changed.

The report said that geopolitical developments will "continue to impact global oil supply developments in the months ahead". Opec said that the US government's "initiation of further sanctions on Russia and the withdrawal from the Iran nuclear deal are additional elements that may be a source of uncertainty in the future, impacting the US economy and global trade".

But Opec said that it, "as always, stands ready to support oil market stability, together with non-Opec oil producing nations participating in the Declaration of Cooperation".

Citing preliminary data for March, Opec said total OECD commercial oil stocks fell by 12.7mn bl from February, to stand 9mn bl above the five-year average. In recent months, Opec and those non-Opec countries that are part of a production cut agreement have been congratulating themselves on helping to drive inventories down towards the moving five-year average. But the MOMR made a nod to an internal debate on what is the best metric to assess the market balance. The report noted that "this current level of OECD stocks still remains 258mn bl above January 2014".

The IEA — the OECD's energy watchdog — will update on stock movements in its monthly Oil Market Report (OMR) on 16 May. And Opec and some non-Opec ministers will meet at the end of June in Vienna to decide the future of the production cut deal that currently runs until the end of the year.

Opec increased its 2018 global oil demand growth forecast by 25,000 b/d, to 1.65mn b/d, "mainly to account for firm OECD data in the first quarter of 2018". Global consumption is expected to average 98.85mn b/d this year.

Opec expects non-Opec supply to grow by 1.72mn b/d in 2018, or about 10,000 b/d faster than anticipated a month ago. Non-Opec supply will average 59.62mn b/d this year, according to the report.

"Upward revisions in the first quarter to the forecasts of the US, Argentina, Colombia and China were partially offset by downward adjustments to Canada, Mexico, Norway, UK, and Brazil," the organisation said.

Opec increased its forecast call on its crude by 100,000 b/d to 32.7mn b/d this year.

World oil supply increased by 120,000 b/d in April from March and by 2.30mn b/d compared with April 2017, to 97.89mn b/d.

Citing secondary sources, including Argus, Opec said its crude production increased by 12,000 b/d in April from March, to 31.93mn b/d.

According to April figures directly supplied to Opec by most member countries, Nigeria boosted its output by 164,700 b/d from March to 1.72mn b/d, Saudi Arabia cut production by 39,100 b/d to 9.87mn b/d and Venezuela reported a decline of 4,000 b/d to 1.51mn b/d.