Opec boosted estimates of demand for its crude this year and next amid stronger-than-expected fuel consumption and a weaker outlook for rival supply.
Opec raised forecasts for the amount it needs to supply in 2017 and 2018 by about 200,000 barrels a day for each year, according to a report from its secretariat in Vienna. Still, a rebound in Libyan production pushed the group’s output last month to the highest this year, undermining its plan to rebalance oversupplied world markets.
Oil prices have lost about 6 per cent in London this year as production cuts by Opec and Russia fail to clear a global glut. Yet Brent futures have stabilised above $50 a barrel this month as US crude inventories diminish, signaling Opec’s actions are finally having some impact.
The organisation increased projections for global oil demand in 2017 and 2018 by about 100,000 barrels a day for each year. Consumption proved stronger than expected in developed nations during the second quarter, it said.
Opec also lowered estimates for rival supply, by 50,000 barrels a day in 2017 and 90,000 a day in 2018, following weak output in the US and Canada last quarter.
The report indicated that Opec’s strategy to rebalance the market is having some success, with oil stockpiles in developed nations falling by 21.9 million barrels in June.
Still, at just over 3 billion barrels, this leaves them about 252 million above their five-year average. Opec has said its main objective is to reduce inventories to average levels.
The plan has been complicated by a rebound in supply from Libya and Nigeria, which were exempt from last year’s agreement to cut production while they tackled domestic unrest and supply outages.
Libyan output climbed by 154,300 barrels a day to about 1 million a day in July.