The Organization of the Petroleum Exporting Countries (OPEC) said on Monday that oil market fundamentals remained strong and slightly raised its 2023 forecast for global oil demand growth and maintained its relatively high 2024 prediction.

Oil has been declining since October amid concern about global economic growth and demand, despite support from supply cuts by OPEC and its allies, known as OPEC+, and conflict in the Middle East. In its monthly report OPEC said the market was healthy despite negative sentiments, citing strong Chinese imports and minor downside risks to economic growth.

In the report, OPEC increased its forecast for world oil demand growth in 2023 to 2.46 million barrels per day (bpd), up 20,000 bpd from the previous forecast. In 2024, OPEC sees demand rising by 2.25 million bpd, in par with estimates from last month.

Monday’s report was the last before OPEC+, meets on the 26 ^th of November to set policy. The group has been cutting production since late 2022 to support the market and its latest agreement calls for output curbs throughout 2024.

Source: TradingView

Oil prices had fallen to their lowest level since July, mainly hurt by concerns that demand could wane in top consumer countries such as the United States and China, amid receding worries over potential supply disruptions from the Middle East.

Meanwhile in America, the U.S. Energy Information Administration (EIA) last week said that the country’s crude oil production this year will rise by slightly less than previously expected and that demand will fall. Next year, per capita U.S. gasoline consumption could fall to the lowest level in two decades.

Last week there was weak economic data from China – the world’s biggest crude importer, showing a 6.4% decrease in Chinese exports in October, raising fears of faltering demand. Chinese refiners asked for less supply for December from the world’s largest crude exporter – Saudi Arabia.

Last week top oil exporters Saudi Arabia and Russia, part of OPEC+, confirmed they would continue with additional voluntary oil output cuts until the end of the year as concerns over demand and economic growth continue to drag on crude markets.

Also, the United States is on track to set a new annual oil production record in 2023 with October being the highest oil production month in U.S. history. In the first week of November, U.S. crude oil production reached a new record of 13.2 million barrels per day. The increasing supply has been bringing down prices steadily. The influence of the United States on global oil markets has grown significantly, as has China’s influence on demand.

On a positive side, the U.S. energy department plans to buy 1.2 million barrels of oil to help to replenish the Strategic Petroleum Reserve after selling record volumes from the stockpile last year, which could further buoy demand. A U.S. crackdown on Russian oil exports could also disrupt supply, supporting prices further.

Overall, investors have been focusing on demand, with concerns of economic weakness in China and elsewhere and record U.S. output capping prices. Oil prices have been progressively declining and are down nearly 20% from its September highs.

However, ongoing conflict in Europe and the Middle East, extended production cuts by OPEC+, and an increase in demand for heating this winter all threaten to push up prices of crude.