OPEC sees global oil market tipping into surplus this quarter

OPEC expects global oil markets to tip into surplus this quarter as it downgraded the outlook for demand and bolstered estimates for rival supplies.

The Organization of Petroleum Exporting Countries cut forecasts for the amount of crude it will need to pump in the third quarter by 1.24 million barrels a day to 28.27 million a day, according to its latest monthly report. That’s about 570,000 barrels a day less than OPEC’s 13 members pumped in July.

The revision diverges from that of the International Energy Agency, which bolstered demand forecasts on Thursday as soaring natural gas prices compel companies and refiners to switch to using oil. But OPEC’s outlook may give further explanation for the minimal production increase it agreed on with its allies last week.

OPEC+ surprised traders at the August 3 meeting with plans to add just 100,000 barrels a day in September, despite calls from US President Joe Biden to open the taps during a visit to group leader Saudi Arabia last month. The alliance explained the move by saying it had to deploy “severely limited” spare production capacity with “great caution.”

OPEC’s Vienna-based research department reduced forecasts for global oil demand this quarter by 720,000 barrels a day, and boosted projections for non-OPEC supply by 520,000 a day. It expects consumption to average 99.93 million barrels a day in the three-month period.

Read: OPEC+ agrees to increase 100,000 barrels a day for September oil production