December 13, 2023

OPEC on Wednesday said it remained cautiously optimistic about 2024 oil market fundamentals and blamed “exaggerated concerns” about demand for a recent drop in prices, as it stuck to its relatively high 2024 oil use prediction.

Oil has weakened to a six-month low near $72 a barrel, even after OPEC+, which includes OPEC oil-exporting nations and allies such as Russia, on Nov. 30 announced a new round of production cuts for the first quarter of 2024.

But the Organization of the Petroleum Exporting Countries in a monthly report said it remained “cautiously optimistic about the fundamental factors affecting oil market dynamics in 2024” and said speculators had played a major role in pushing prices lower.

“Crude oil futures prices experienced a significant downturn, marked by heavy selloffs amidst a highly volatile futures market,” OPEC said in a commentary on prices in November.

“The market dynamic was fuelled by exaggerated concerns about oil demand growth, which negatively impacted market sentiment.”

OPEC kept its forecast for world oil demand growth in 2023 steady at 2.46 million barrels per day (bpd). In 2024, OPEC sees demand growth of 2.25 million bpd, also unchanged from last month.

The group has consistently forecast stronger demand growth for next year than other forecasters such as the International Energy Agency, although the two have a similar view on 2023.

The IEA, which sees demand growth slowing to 930,000 bpd in 2024, is scheduled to update its forecasts on Thursday.

OPEC OUTPUT FALLS
OPEC+ oil producers have been cutting production since late 2022 to support the market in a series of steps. The OPEC report noted that OPEC oil production fell in November, ending a series of increases.

Iran, exempt from OPEC supply cuts because of U.S. sanctions, has been boosting output in 2023 in a trend that analysts say appears to be the result of Iran’s success in evading the sanctions and U.S. discretion in enforcing them.

Nigeria and Angola have been recovering from internal challenges that have limited their output.

But in November, OPEC pumped 27.84 million bpd, down 57,000 bpd from October, the report said, citing figures from secondary sources, as production in Iraq, Angola and Nigeria decreased.

A Reuters survey on Dec. 6 put OPEC output last month close to this level at 27.81 million bpd.

Saudi Arabia, which extended a voluntary cut of 1 million bpd into the first quarter of 2024 as part of the Nov. 30 OPEC+ deal, told OPEC that it cut production by 122,000 bpd to 8.818 million bpd in November.

REUTERS