OPEC OIL PRODUCTION: 32.19 MBD

PLATTS - Months of confidence that global demand growth in 2018 will amply absorb any increases in non-OPEC supply appear to have finally eroded, with OPEC's analysis arm on Wednesday issuing its first mildly bearish outlook for the year.

In its closely watched monthly oil market report, OPEC projected a year-on-year rise of 1.66 million b/d in non-OPEC supplies in 2018, while demand is seen increasing by 1.60 million b/d.

This is the first report since OPEC began forecasting 2018 figures in July 2017 that its estimate of non-OPEC supply growth has exceeded its prediction of global demand, and it indicates that the bloc will have to maintain its production discipline if it wants the market's rebalancing to continue, though continued declines in Venezuelan output provide some cushion for other members.

Non-OPEC supply in 2018 "is now expected to grow at a faster pace," the report stated, and will average 59.53 million b/d, a 280,000 b/d upward revision from last month's forecast, largely due to an increase in forecast US output.

The report noted that oil prices over the past few months have been higher than they have been in more than two years "For 2018, higher growth is expected on the back of the projected increase in US shale production following a better price environment, not only for shale producers, but also for other countries, such as Canada, UK, Brazil and China," the report said.

Global demand will hit 98.63 million b/d in 2018, a 30,000 b/d upward revision from February's report as OPEC continues to see healthy economic growth driving greater consumption, though it warned that rising interest rates and the recent decision by the US to impose steel and aluminum tariffs could dampen that momentum.

Demand for OPEC crude will average 32.61 million b/d in 2018, the organization calculated, a 200,000 b/d decrease from last month's projection.

Assuming OPEC keeps its production at the 32.19 million b/d in February as estimated by secondary sources used to track output independently in the report, the market will tighten significantly in the second half of the year, following stock builds in the first half.

OECD commercial oil inventories rose 13.7 million barrels in January and remain 50 million barrels above the five-year average, OPEC estimated. The stocks represent 60.0 days of forward cover, 0.6 days lower than the five-year average.

VENEZUELA CONTINUES FALL

The report comes as OPEC and 10 non-OPEC partners led by Russia are coordinating on supply cuts of 1.8 million b/d from October 2016 levels to rebalance the market and bring OECD inventories down to the five-year average.

A monitoring committee chaired by Saudi energy minister Khalid al-Falih overseeing the deal will meet in Saudi Arabia in April to review compliance with the cuts and assess market conditions.

OPEC's February output, which was an 80,000 b/d decline from December, was some 540,000 b/d below their nominal ceiling of 32.73 million b/d, when each country's quota under the agreement is added up.

Venezuela, whose production has been in free fall, once again had the largest month-on-month drop in production in February of 50,000 b/d to average 1.55 million b/d, secondary sources estimated.

The crisis-wracked country self-reported to OPEC a February output figure of 1.59 million b/d, down 180,000 b/d from December. Venezuela's quota under the deal is 1.97 million b/d.

The UAE had the second largest fall of 30,000 b/d from January to average 2.83 million b/d in February, secondary sources estimated. This is largely due to field maintenance, industry officials previously told S&P Global Platts. The UAE's quota under the deal is 2.87 million b/d.

Iraq, OPEC's second largest producer, had a fall of just below 30,000 b/d to 4.43 million b/d in February. The country, which has a quota of 4.35 million b/d, self-reported February output of 4.36 million b/d, the sixth month in a row in which it has reported that figure.

Nigeria saw the largest rise in the month, boosting production just over 20,000 b/d to 1.81 million b/d, while Libya increased output by 10,000 b/d to 1 million b/d. The two countries have a combined 2.8 million b/d cap under the deal, after having spent 2017 exempted from the cuts as they recovered from civil unrest.

Saudi Arabia, OPEC's largest member, pumped 9.98 million b/d in February, secondary sources estimated, while it self-reported output of 9.94 million b/d. Its quota is 10.06 million b/d.

Iran, OPEC's third largest producer, which is allowed to pump 3.80 million b/d under the deal, had output of 3.81 million b/d in January, according to secondary sources, matching what it self-reported to OPEC.

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Earlier:

2018, March, 9, 13:40:00 OPEC OIL PRICE: $66.85 OPEC - The OPEC Reference Basket increased for the fifth-straight month in January, gaining a sharp 7.7% to average $66.85/b, the highest monthly average since November 2014. Oil prices were supported by continuing efforts by OPEC and participating non-OPEC producers to balance the market and ten consecutive weeks of crude inventory draws amid healthy economic growth and improving oil demand.

2018, February, 27, 14:00:00 OPEC - RUSSIA COOPERATION PLATTS - "I think we are seeing more cooperation, and my hope is that this group of OPEC and non-OPEC will incentivize the adequate investments among themselves to ensure we have adequate supply in the market," he said. "My worry is not an oversupply. My worry is an undersupply. Everyone is expecting that we will have more demand coming in the future."

2018, February, 14, 10:10:00 RUSSIA - OPEC RELATIONSHIP PLATTS - "We understand that global demand for oil will continue to grow rapidly and this demand will need to be met, so we will likely need to work together, including on upstream technology and joint projects to meet this growing demand," Novak said.

2018, February, 14, 10:00:00 OPEC'S OIL DEMAND: 32.86 MBD PLATTS - As a result, demand for OPEC crude will average 32.86 million b/d in 2018, the organization calculated.

2018, January, 22, 08:40:00 OPEC'S CONSTRUCTIVE ROLE OPEC - HH Sheikh Sabah praised all 24 participating countries, both OPEC and non-OPEC, for their joint efforts towards restoring much needed oil market stability, as well as keeping faith in the collaborative approach which is at the heart of the ‘Declaration of Cooperation’.

2017, December, 18, 12:40:00 OPTIMISTIC OIL PRICES BLOOMBERG - OPEC’s Secretary General Mohammad Barkindo said the producer group is close to its goal of rebalancing markets and the International Energy Agency said oil inventories in developed nations have slid to the lowest since July 2015. OPEC upped the implementation of promised cuts in November to 115 percent, the highest rate since the agreement began, according to the IEA.

2017, December, 18, 12:35:00 INEVITABLE OIL CHANGES OPEC - Sustainable oil market stability is crucial to attract the level of investment necessary for future demand growth; In the longer term, oil will remain a vital and integral part of the energy mix; Global energy and oil demand will grow in the long term;