Nov. 13 (UPI) — Crude oil prices were trading flat to slightly lower early Monday as traders looked to OPEC for signs of emerging trends, but held out for U.S. oil projections.
The Organization of Petroleum Exporting Countries said Monday it expected demand for its oil will accelerate next year on the back of stronger global economic momentum. Demand next year will outpace OPEC production from the third quarter, suggesting a multilateral effort to balance the market is working.
OPEC in its monthly market report for November said its “landmark” decision to trim the surplus on the five-year average for crude oil inventories was a necessary move to counter the glut that last year pushed oil prices below $30 per barrel.
“These distinguished efforts focused on accelerating the drawdown of the global stock overhang in order to hasten the return of sustainable oil market stability,” it said.
OPEC economists said production from its member states declined by about 151,000 barrels per day last month, while oil inventories in the world’s major economies shrank. Next year, production from non-member states is also expected to decline, adding support to the balancing effort.
Oil prices were, however, mixed at the open. The price for Brent crude oil was more or less flat at $63.49 per barrel by the opening bell in New York. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.3 percent to $56.94 per barrel.
Ole Hanson, the head of commodity strategy at Saxo Bank, said OPEC expects the world will need more of its oil next year, but that’s largely because of what it expects from producers outside the group.
“Basically OPEC’s bullish outlook is based on a too pessimistic outlook for non-OPEC supply growth, in my honest opinion,” he said.
Markets may react later in the day when the U.S. Energy Information Administration releases its monthly drilling productivity report, which gives indications on the future potential from the largest shale oil basins in the United States.
Strong gains could spoil any rally that emerges once traders comb through OPEC’s 100-page market report. Prices turned lower last week when drilling services company Baker Hughes reported gains in the U.S. rig count, which points to future potential in the exploration and production side of the industry.