LONDON (Reuters) - OPEC said the world oil market was well supplied despite a plunge in Libya’s output and forecast a further drop in its oil market share in 2014 due to rising supply from the United States and other countries outside the group.
The virtual shutdown of Libyan oil output for the second time in two years and the prospect of U.S. military action against Syria pushed Brent crude to a six-month high above $117 a barrel in late August.
In a monthly report, the Organization of the Petroleum Exporting Countries said although “some supply outages” had put upward pressure on prices, oil stocks in developed OECD countries still equaled almost two months of future demand.
“OECD inventories stand at a comfortable level of 58.5 days,” the report said. “This figure is above the historical norm and provides confirmation that the market at present remains well supplied.”
The comment is OPEC’s first collective word on the oil market impact of the Libyan unrest, which has taken global supply outages to more than 3 million barrels per day (bpd) - some 3.5 percent of global demand.
The International Energy Agency, which during the 2011 Libyan civil war ordered a rare release of oil from strategic reserves it controls, has a similar view to OPEC this time, saying on August 29 the market was “adequately supplied.”
Brent fell to around $112 on Tuesday as expectations ebbed of an imminent strike on Syria.
OPEC, which pumps a third of the world’s oil, in the report also forecast a further erosion of its share of the world market in 2014 due to rising supplies from outside the 12-member group.
Demand for OPEC crude in 2014 will average 29.61 million bpd, down 320,000 bpd from 2013, the report forecast. Last month’s report estimated a 260,000 bpd year-on-year decline in the demand for OPEC oil.
OPEC left estimated growth in world demand next year at 1.04 million bpd, while increasing the non-OPEC supply forecast to 1.22 million bpd. The U.S., undergoing a shale energy boom, is expected to be a major contributor to next year’s supply growth.
OPEC is still pumping more than the demand for its crude, despite Libya. In August, OPEC supply fell by 124,000 bpd to 30.23 million bpd as extra oil from Saudi Arabia helped offset losses, according to secondary sources cited by the report.
The outlook could point to a challenging year for OPEC as rising rival output will make it harder for the group to keep its own output at high rates without risking a drop in prices below $100 a barrel, its preferred level.
OPEC’s report is the first of this month’s trio of oil supply and demand forecasts. The U.S. Energy Information Administration issues its report later on Tuesday, while the IEA updates its outlook on Thursday.
Reporting by Alex Lawler, editing by William Hardy