Is anyone at the Fed listening?
As OPEC prepares to meet tomorrow (Thursday) in Vienna, the group expects demand for its crude oil to weaken. According to yesterday’s release of their monthly market report, OPEC estimates demand for its oil at 28.6 MMbbl/d in 2010. That represents a downward revision of 0.1 MMbbl/d from last month’s report and a decline of 0.3 MMbbl/d from 2009. Demand for OPEC’s oil in 2011 is expected to average 28.8 MMbbl/d.
OPEC revised up its estimate of overall global demand growth in 2010 and 2011 to 1.13 and 1.05 MMbbl/d respectively. As such, demand is forecast at 85.59 MMbbl/d in 2010 and 86.64 MMbbl/d in 2011. Growth in non-OPEC supplies is expected to sop up incremental demand.
To wit, supply of oil outside of the Organization is forecast to grow by 1.01 MMbbl/d to 52.23 MMbbl/d. That is the largest increase since 2002.
Meanwhile, total OPEC estimated production in September was 29.08 MMbbl/d or 26.67 MMbbl/d (excl. Iraq). As such, the Group’s production was 1.82 MMbbl/d (+7.3%) above its production ceiling and 0.48 MMbbl/d (+1.7%) above its demand estimate. However, with a tenuous economic recovery in the West, perception in the market holds that OPEC will keep production quotas unchanged.