LONDON (ICIS)--The Organisation of the Petroleum Exporting Countries (OPEC) on Thursday noted while its projections for 2014 non-OPEC oil supply growth now stands higher at 1.44m bbl/d, global demand remains in line with its previous month’s forecast at an increase of 1.14m bbl/d.
In its June monthly report, OPEC - which has an estimated 81% share of the world’s known oil reserves - attributed an upward revision of around 60,000 bbl/day in 2014 non-OPEC supply growth mainly to oil-rich countries US, Canada and Brazil.
US liquids supply was estimated to grow by 950,000 bbl/day to reach 12.13m bbl/day this year.
The oil cartel said the relative stability of prices in 2014 to date is an indication the market is adequately supplied, with the periodic price fluctuations being more a reflection of geopolitical tensions than a response to fundamentals: "Geopolitical factors have driven prices in both directions."
“Since the start of 2014, crude oil price volatility has eased, with the range between minimum and maximum daily prices for the OPEC Reference Basket averaging around $6/bbl, the lowest since 2003,” OPEC said.
OPEC said crude inventory levels at the 34-member Organisation for Economic Co-operation and Development (OECD), in terms of days of forward demand cover, were comfortable.
“Moreover, inventories in the US - the only OECD country with positive demand growth - stand at high levels,” OPEC said.
“Non-OECD inventories are also on the rise, especially in China, which has been building Strategic Petroleum Reserves (SPR) at a time when apparent demand is weakening due to slowing economic activities,” it said.
In light of the foregoing, the oil cartel said the forecast for required crude from member countries in 2014 was revised down by 100,000 bbl/day to stand at 29.70m bbl/day.
“Overall, the ongoing rise in supply would be adequate to satisfy the growth in oil demand in 2H14, resulting in a well-balanced market,” it said.
OPEC's June monthly report was released a day after the 165th meeting of the OPEC convened in Vienna, Austria.
OPEC observed in the report that, while world economic growth was projected to reach 3.4% in 2014, up from 2.9% in 2013, downside risks to the global economy, from both industrialised and emerging economies, remain unchecked.
In terms of oil products and refining operations, the organisation noted the boost in demand for gasoline in the Atlantic Basin from the US summer driving season but added refinery margins have been pressured by higher refinery runs and rising gasoline inventory levels.
In Asia, the market lost ground in May as middle distillates and gasoline crack spread plummeted, which more than offset the good performance of the bottom of the barrel.