World oil markets witnessed active movement during the last period, reaching the amount of production to the highest level in modern history of the Organization of Petroleum Exporting Countries (OPEC), nearly 32.9 million in the month of June, according to the monthly statistical bulletin of the Organization.
This is the case for OPEC, which show optimism for the improvement of the balance of supply and demand for oil during the coming period. A group of ministers of«OPEC» had expressed in recent remarks about the possibility of improvement in the market in the coming months, based on the available economic data.
The continued imbalance of supply and demand despite the recovery in demand and lower supplies from outside the Organization of Petroleum Exporting Countries (OPEC) and the continued high production of OPEC itself to 2.33 million barrels a day.
Recently , the monthly report of the Organization of «OPEC» for the markets was released, and the initial perceptions of the Organization of the oil markets during 2017 suggest the possibility of improvement of the demand for the countries of OPEC oil to about 33 million barrels per day (no more than the current production), an increase of 142 thousand barrels per day compared to the production registered last June. What would be an increase in demand of around 1.1 million barrels per day compared to levels this year.
In light of increasing this demand, the organization expects the glut of global oil reserves fall below the current year, while the statistics of «OPEC» indicate that commercial stocks of countries Organization for Economic Cooperation and Development (Western industrialized countries) amounted to 3.063 million barrels in last May . This means that the inventory level amounted of 329 million barrels , it is more than the average for the past five years. This inventory accounts for about 65.9 days of consumption in the Western industrialized nations, or 6.7 days higher than the rate of the past five years.
On the other hand , the International Energy Agency indicated in its monthly report the stability of the growth of the global demand on oil in the year at around 1.3 million bpd, the same level as the estimates for the current year, pointing out that it expects to record a small rise in world oil inventories in the first half of the next year , then returning to the decline after that, especially in the second half of the same year, with up to one hundred thousand barrels per day.
The Advisory House “Berra” to expect that it will balance the market in an integrated manner in 2017, and in 2018 the market returns to a state of high demand for supply and a drop in inventory levels that are working together to support oil prices. The organization forecasts that the world demand on oil by 1.2 to reach an average of demand to 95.3 million barrels a day.
In terms of the global oil market, the organization expects global demand growth of 1.2 million barrels per day during 2017, as the bulk of this growth will come from countries not members of the Organization for Economic Co-operation and Development.
According to the forecast of “OPEC,” the rate of decline of non-Member States will be faster than the rate of increase in production. It means of the continuing decline in production from these countries during 2017, but the slower pace from this year, of which about 0.18 million barrels per day and about 0.13 million barrels per day from the former Soviet Union.
The organization also reported that production from outside the “OPEC” and will probably be the biggest decline of the highest rates of Mexico , the United States, Norway and Colombia , Russia, Azerbaijan, Kazakhstan and Vietnam. While it expected to be higher rates of increase in Brazil by about 0.26 million barrels per day, Canada 0.15 a barrel.
The analysts’ expectations indicate to economic data better than expected from China and the US economic data helped to boost prices in the hope of enhancing the demand in the second half of 2016, and investment in infrastructure for the oil sector and the current level of inventories of oil in the United States and others of the major countries consuming of oil in the world.
It is said that the organization had expected to increase oil supplies this year after due to the the lifting of the sanctions on Iran and strengthen its production of crude that compensate some of the disruption of the supply within the organization as well as producers outside the Organization losses after the collapse of prices.
It remains to say that the volatility of the oil market currently gives a state of uncertainty on the market that seeks to balance in a slow pace with global developments affecting it, whether on-demand or oil supplies, even if the OPEC forecasts are optimistic but market factors and variables remain always present. All of this means that the oil market should not expect too much till to the next ministerial meeting in the next November 30 which might carries the news that would change the oil market equation, unless new events occur affecting the upcoming meeting’s decisions.
Rawabet Center for Research and Strategic Studies