Just when we thought excessive oil supplies would continue to keep oil prices at their lowest, oil producers outside the Organization of Petroleum Exporting Countries are reporting on a drop in crude numbers despite a rise in global oil demand. The situation could lead to oil prices turning the corner and starting to head northwards.
In OPEC's October report, the 12-country producer group run by Saudi Arabia predicted world oil demand growth in 2015 would rise by 1.5 million barrels per day up around 40,000 barrels a day on the previous estimate.
Good for OPEC Members
The OPEC forecast of an increase in global demand is positive news for the member countries as many of their rivals have had to cut back on the production and drilling while contending with high costs of production.
The report said, "While the increase in non-OPEC supply last year was more than twice that of global oil demand growth, this relationship is expected to flip this year before widening further in 2016 so that world oil demand growth exceeds the change in non-OPEC supply. This should reduce the excess supply in the market and lead to higher demand for OPEC crude."
Non-OPEC producers, such as those in the U.S. and Canada, are having a harder time dealing with the sharp drop in oil prices which have gone from around $114 last June to around $50 a barrel today. U.S. crude stockpiles are diminishing slowly and not at the rate predicted. Benchmark Brent crude has risen from $48.06 over the last seven days, peaking at $54.05 on Friday and trading at $52.948 Monday morning.