OPEC Moving to Tighten Market, as Demand Rebounds

In today’s Oil Market Report (OMR), the International Energy Agency (IEA) provided a revised outlook that suggested a tighter oil market than orginally assumed, with rising demand estimates pushing against a decline in OPEC output. Indeed, with OPEC crude production having remained well above 31 mbpd during the first three quarters of 2012, global supply outpaced demand by 1.4 mbpd during that period. Those comfortable inventory builds are coming to an end for the moment, however, as the agency has hiked its oil demand forecasts, citing more rapid growth in Chinese oil demand. With OPEC already cutting its crude production by 0.65 mbpd since October, to 30.64 mbpd in December, the cartel has moved reduce supplies and cede market share to rising North American production. Additional OPEC cuts may pressure the tanker markets during 1h13, but rising demand expectations are suggesting a stronger end to the year, as dirty tanker fleet growth slows significantly. Download here