OPEC revised its forecast for global oil demand slightly downwards in its monthly report published yesterday due to the expected impact of US tariffs. It now expects an increase of 1.3 million barrels per day for both this year and next. OPEC is thus still more optimistic than most market observers, Commerzbank's FX analyst Michael Pfister notes.
Expected demand for OPEC+ oil remains virtually unchanged
"As the forecast for the increase in supply outside OPEC+ was lowered by a similar amount at the same time, the expected demand for OPEC+ oil remains virtually unchanged. This is expected to remain unchanged at 42.6 million barrels per day for the current year. Compared to OPEC+‘s oil production of around 41 million barrels per day in March, the resulting supply deficit remains large, leaving room for OPEC+’s planned production increase."
"OPEC's forecast is therefore at odds with the US Energy Information Administration (EIA), which expects a significant oversupply on the oil market this year due to weaker demand and rising OPEC+ production. According to the OPEC monthly report, the OPEC+ countries bound by production quotas exceeded the agreed production volume by a good 200 thousand barrels per day in March, primarily because Kazakhstan produced significantly above target."
"Kazakhstan reduced its oil production in the first 13 days of April by 3% compared to the March average of 1.82 million barrels per day, the energy ministry announced yesterday, without naming a specific quantity. However, this would still leave production well above the agreed level of 1.47 million barrels per day. This does not include the cuts to compensate for the previous overproduction to which Kazakhstan had committed itself."
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