REUTERS
In its Monthly Oil Market Report for March, released Monday morning, the Organization of the Petroleum Exporting Countries (OPEC) noted that the cartel's price for its reference basket rose by 8.4% ($2.22 per barrel), the first price increase in three months. OPEC coyly noted the positive sentiment in the oil markets "arising from the efforts of major producers to trim output" along with falling U.S. production and "healthy physical oil markets," according to Yahoo! Finance.
Global demand growth for 2016 remained unchanged from last month's report at around 1.25 million barrels per day, or a daily average of 94.23 million barrels. In 2015, demand growth averaged 1.54 million barrels a day for a daily average of 92.98 million barrels, Yahoo! Finance reported with reference to 24/7 Wall St.
The cartel revised its estimate of non-OPEC supply growth for 2015 up by 100,000 barrels a day to 1.42 million barrels, or a daily average of 57.09 million barrels. For 2016 OPEC forecasts non-OPEC supply will drop by 700,000 barrels a day and average 56.39 million barrels a day for the year. The cartel said OPEC production in February, as reported by secondary sources, fell by 175,000 barrels a day to a daily average of 32.28 million barrels.
Demand for OPEC crude in 2015 was revised downward by 100,000 barrels a day to 29.7 million barrels. The cartel also lowered its estimate of 2016 demand for OPEC crude by 100,000 barrels a day to a new average of 31.5 million barrels a day.
Crude prices have risen sharply over the past two weeks, but when looking over these numbers it's hard to see why, Yahoo! Finance said.
OPEC estimates its 2016 production will be 1.8 million barrels a day more than a year ago, when global inventories rose dramatically.
A proposal for a production freeze at January's level by major oil exporters, and more news about an additional oil producer meeting in March, as well as further layoffs by service companies and related reports about a complete halt of fracking activities by some companies, all lent support to the market.
In February OPEC production of 32.28 million barrels a day was 780,000 barrels more than OPEC's forecast for demand on its members' production. Even if global production falls by the cartel's estimated 700,000 barrels a day, demand still trails supply. That is not a formula for higher prices.
Benchmark West Texas Intermediate (WTI) for April delivery traded down more than 4% Monday morning at $36.88. Brent for May delivery traded down nearly 3% at $39.24.