The Organization of Petroleum Exporting Countries said Wednesday it wouldn’t need to boost its supply after cutting demand forecasts for its crude and boosting supply estimates for rival producers, despite the impact of a U.S. oil spill.
In its monthly report for June, the organization also warned of likely downgrades in global consumption estimates in the second half, and slightly cut its annual forecast amid a slowing recovery.
OPEC cut 2010 demand estimates for its crude by 70,000 barrels a day and now sees a year-on-year decline of 175,000 barrels a day. "This would leave no room for additional crude oil supplies in the market," it said. OPEC’s next meeting is not due until October.
The organization, which members currently produce over a third of the oil consumed worldwide, is losing market share to non members, which include Russia and the U.S.
It boosted non-OPEC oil supply estimates by 110,000 barrels a day for 2010, making it an increase of 640,000 barrels a day.
The largest upgrade came from U.S. supply, despite OPEC warning production there could be affected by an extension of a Gulf of Mexico drilling moratorium and a hurricane season expected to be worse than usual.
The moratorium, which follows an explosion and a huge spill at BP’s Macondo well on Apr. 20, is affecting 35 wells "which will have a heavy influence on production in 2010 and 2011," OPEC said.
The group also warned "an expected moderation in the pace of the economic recovery is likely to impact demand growth forecasts for the second half."
It cut its global oil demand forecast for the year by about 10,000 barrels a day to 85.37 million barrels a day, but kept consumption growth unchanged at about 950,000 barrels.
Despite the challenges they face in finding buyers for every new barrel they produce, OPEC members have been steadily increasing their output in the past twelve months.
In May, quota-bound members increased production by 19,600 barrels a day to 26.83 million barrels a day, despite agreeing to 4.2 million barrels a day in cuts late 2008.
Iraq, the only OPEC not subject to quotas, experienced the largest rise in the month, with 121,300 barrels a day.
(Dow Jones Newswires)