Demand for crude oil in 2016 is seen edging higher compared to last year, while supply is forecast to be slightly lower, according to the October OPEC market report, which highlights how money managers were caught out by a new deal to limit production.
This month's revisions to the forecasts are minimal, with only a 0.1 million barrels per day (mb/d) rise in demand added to both annual forecasts since September's report.
Overall, the report – released Wednesday - anticipates the gap between demand and supply moving up by 1.8 mb/d to 31.82 in 2016 from 30.06 in 2015. This dynamic slightly exacerbating the market's imbalance in favor of producers, in a trend expected to continue into 2017 when the gap is seen increasing to 32.59.
This is the first monthly note from the cartel since OPEC members agreed in Algiers last month to limit production, a move which "caught the market off-guard", according to the report, and prompted a strong rally in prices of both Brent and WTI crude.