OPEC Increases Future Crude Oil Demand
March 11th, 2010 Posted in Oil and Precious Metals
Spot crude oil traders may have found another reason to be bullish on the commodity. OPEC is forecasting global crude oil demand to rise by 900K barrels per day in 2010. The increase comes as a revision to last month’s forecast but the increase remains contingent on a continued global economic recovery.
The Organization of the Petroleum Exporting Countries (OPEC), who provides the world with almost 35% of crude oil supplies, increased its forecasted demand to 85.24M barrels per day. This is an increase of almost 100K barrels per day from the February estimates. The report also mentioned that OPEC member nations continue to oversupply the market.
Comments included with the estimates noted that 2009 was the poorest performing year for oil demand since the oil crisis in the 1980s. Further crude oil demand will depend on the ability of the global economy to lift itself from the recessionary period experienced last year. Demand is also heavily dependant on government stimulus funds. The oil cartel worries that when governments begin to pull back on the amount of funds they are pumping into the global economy, crude oil demand may stagnate.
The increase in OPEC’s crude oil forecast can be taken as a positive sign for the price of spot crude oil. The next meeting of the oil cartel is set take place on March 17th. It is not expected that the member nations will change the production quotas, as currently member nations are non compliant with their imposed quotas. Output was ordered to be reduced following the slide in oil prices from $147 to $30. OPEC member nations are said to following only 55% of the quotas mandated by the organization.
Non compliance with OPEC quota mandates are nothing new for the oil cartel. But an improved oil demand forecast is. This could finally help spot crude oil prices breach a long held resistance level of $84.00.
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Tags: Commodities, Crude Oil Demand, dollar, Future Demand, OPEC, spot crude oil, spot crude oil prices, spot crude oil trading
