Sept. 12 (UPI) -- While global crude oil inventories remain above the five-year average, demand could eat into the surplus because of better-than-expected growth, OPEC said.
Economists at the Organization of Petroleum Exporting Countries said in their monthly market report for September that total commercial oil stocks for members of the Organization for Economic Cooperation and Development was 195 million barrels above the five-year average and 123 million barrels above the seasonal norm.
OPEC and handful of non-member states, notably Russia, started implementing an agreement in January aimed at draining the five-year surplus through coordinated production declines. That deal runs through March and could be extended.
Secondary sources reporting to OPEC economists found total OPEC production in August was down about 79,000 barrels per day from the previous month. Production from Saudi Arabia, the largest OPEC producer, remained about the average for the second quarter. Russian oil production is holding steady, but still represents a slight increase from the average last year.
Ole Hanson, the head of commodity strategy at Saxo Bank, told UPI total OPEC production is in line with what they think will be necessary next year.
"In other words, there is currently no room to reduce the production cuts come March, when the current deal expires," he said.
Several member states did not report production data directly to OPEC. A committee monitoring the production cuts meets at the end of the month.
In terms of demand, OPEC raised its forecast by 50,000 barrels per day to 1.42 million bpd for the year, reflecting OECD growth as well as China. Demand growth next year is driven in large part by expansion in the European and Chinese economies.
In terms of growth, OPEC economists said they revised their forecast for the global economy up from 3.4 percent to 3.7 percent.
"OECD growth has performed better-than-anticipated in the current year -- particularly the Euro-zone and to some extent in the United States -- and is now forecast to grow by 2.2 percent in 2017 and 2.0 percent in 2018," OPEC's economists said.
The U.S. economy could take a hit from the impacts of Hurricanes Harvey and Irma. It could take several months for the U.S. energy sector to return to normal and the market strains from the storm are likely to have a dramatic impact on crude oil inventories and gasoline levels. Several refineries are still out of service and some retail gas stations in Florida ran dry before Irma made landfall earlier this week.