Oil Prices Ease Despite OPEC’s Positive Expectations

Oil prices closed lower on Thursday after OPEC maintained expectations for demand growth this year.

Brent crude futures for October delivery lost 13 cents, or 0.18%, to close at $71.31 per barrel, snapping a two-day rising streak, while the West Texas Intermediate (WTI) futures decreased by 16 cents, or 0.23%, to end the session at $69.09 a barrel.

Today, the Organization of Petroleum Exporting Countries (OPEC) monthly report for August showed that the growth in the global demand for oil is estimated at six million barrels per day this year, maintaining the same expectations of July.

This year, oil demand is expected recover to 96.6 million barrels a day, with OPEC seeing a recovery by 3.3 million barrels per day in 2022, with global demand exceeding 100 million barrels per day (bpd) in the second half of 2022. Average demand of 99.9 million bpd is seen for the year.

Despite maintaining the same expectations, OPEC sees that the global economic conditions have already improved due to increased vaccinations and recovery from the coronavirus pandemic.

OPEC also expects an increase in supplies, with non-OPEC output seen growing by 270,000 bpd this year and by 840,000 bpd in 2022.

The OPEC+ commitment to the current level of output cuts stood at 115%, despite OPEC members increasing production in July by about 640,000 bpd to 26.7 million.

OPEC is gradually easing output cuts, and while Libya, Iran, and Venezuela are exempt from output restrictions, Iraq, Nigeria, Kuwait, and the UAE increased production last month, while Saudi Arabia is easing its voluntary cuts.