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OPEC Reduces Expectations For Global Demand Growth

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OPEC Reduces Expectations For Global Demand Growth

The Organization of the Petroleum Exporting Countries slashed its forecast for global oil demand growth in 2016.

According to Reuters, OPEC is now predicting global demand for oil will increase by 1.20 million barrels per day in 2016, marking a reduction of 50,000 barrels per day from its prior forecast.

OPEC is also projecting demand for its own crude will average 31.46 million barrels per day throughout 2016, marking a decrease of 60,000 barrels per day from its prior forecast.

The organization cited warmer weather, the removal of fuel subsidies and deteriorating economic conditions in Latin America and China.

Related Link: 'Peak Oil' Not Until 2035, Demand 'Could Well Be Stronger' In Coming Years

"Current negative factors seem to outweigh positive ones and possibly imply downward revisions in oil demand growth, should existing signs persist going forward," Reuters quoted OPEC as saying in a report.

Finally, OPEC is projecting the world will see an excess supply of 790,000 barrels per day throughout 2016, assuming that production maintains steady at March's rate. However, this assumption may be challenged as OPEC producers and major non-OPEC oil producing nations will gather in Doha, Qatar to discuss a freeze in production.

Iran appears to be maintaining a position that a freeze to its oil exports is unacceptable as the nation has its eyes set on regaining lost market share following years of economic sanctions.

Meanwhile, Saudi Arabia maintains its position that it will only agree to a freeze in output, but only if Iran agrees to do so.

 

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