OPEC Raises Crude Oil Demand Estimate

The forecast is pushing crude prices higher in Tuesday morning trading, with West Texas Intermediate (WTI) for June delivery up about 2.4% at around $60.65 a barrel and Brent up about 2.9% at around $67 a barrel.

OPEC now estimates world demand in 2015 to reach 92.5 million barrels a day, up 1.18 million barrels a day over the total 2014 demand of 91.32 million barrels a day. The cartel’s current supply forecast calls for non-OPEC supply to total 57.16 million barrels a day in 2015, up from 56.48 million barrels a day on average in 2014 and up from last month’s forecast for total demand of 57.09 million barrels a day.

The cartel does not forecast its own supply, choosing instead to cite unnamed secondary sources for estimates of demand on OPEC. For April these secondary sources put OPEC’s total crude production at 30.84 million barrels a day, about 18,000 barrels a day higher than the reported total for March. Saudi Arabia boosted production in April to 10.1 million barrels, according to the secondary sources, about 26,000 barrels month-over-month.

The price of OPEC’s reference basket of crude oil rose $4.84 a barrel in April to $57.30 a barrel, its highest level of 2015 so far. Oil futures prices for Brent rose above $60 a barrel for the first time. OPEC attributed the higher prices to a “belief that the supply glut may be easing, with higher demand projected ahead of the peak US driving season.”

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The U.S. Energy Information Administration (EIA) issued its May drilling productivity report on Monday, and the agency expects U.S. production to fall by 86,000 barrels a day in June, after dropping slightly in April and May. If drilling resumes in June or July, as some U.S. companies have indicated, the rising prices for crude could hit a wall.

WTI crude for June delivery traded at $61.00, up 3%, at noon on Tuesday. The daily range was $59.12 to $61.15 a barrel. The 52-week trading range is $45.93 to $98.22.

Brent futures traded at around $66.80 on the ICE, up about 2.9%. Brent traded in a range of $64.68 to $67.09 early Tuesday. The 52-week trading range is $50.10 to $109.76.