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OPEC Says Oil Market Fundamentals Remain Strong

On Monday, OPEC asserted that the fundamentals of the oil market remained robust, attributing the decline in prices to speculators. The organization slightly increased its 2023 projection for global oil demand growth while maintaining a relatively high forecast for 2024.

From its peak in September at nearly US$98 per barrel for Brent crude, oil has retreated to around US$82. Despite OPEC and its allies implementing supply cuts and geopolitical tensions in the Middle East, concerns about economic growth and demand have exerted downward pressure on prices.

In its monthly report, OPEC expressed confidence in the market’s health, dismissing “exaggerated negative sentiments.” The report highlighted strong Chinese imports, minimal downside risks to economic growth, and a resilient physical oil market.

OPEC adjusted its 2023 forecast for global oil demand growth to 2.46 million barrels per day (bpd), a modest increase of 20,000 bpd from the previous projection. The 2024 demand estimate remained unchanged at 2.25 million bpd. The easing of pandemic lockdowns in China contributed to the rise in oil demand in 2023, with OPEC consistently projecting stronger growth compared to other forecasters like the International Energy Agency.

OPEC and its allies, collectively known as OPEC+, have been implementing production cuts since late 2022 to stabilize the market. However, the report noted a rise in OPEC oil production in October, driven by increased output from Iran, Angola, and Nigeria, despite the pledged supply cuts.

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