OPEC raised its forecast for global oil demand for 2017 and the end of the decade. The organization expects that more expensive oil will encourage consumption despite the economic slowdown. According to the annual report of the group World Oil Outlook, the demand will reach 95.3 million barrels per day in 2017, which is 0.3 million barrels per day more than initial forecasts. OPEC raised its forecast for oil consumption for 2018, 2019 and 2020 to 98.3 million barrels per day, representing an increase of 0.9 million barrels per day from the previous forecast.
However, OPEC cut estimates for oil prices with 20 USD per barrel for each year from 2016 to 2020, compared to previous forecasts. The group suggests that crude oil price will average at 40 USD barrel in 2016 and raised its price forecast by 5 USD per barrel in each subsequent year until 2020. The price of Brent crude oil averaged 44 USD per barrel in 2016 so far.
“The increased demand forecast is the result of lower medium-term forecast for oil prices, which is expected to have a strong influence on forecasts of slower medium-term economic growth and enhanced energy efficiency policies”, says the report of OPEC.
The forecasts for the global economic growth was reduced to 3.4% annually in period 2015-2021, compared to previous expectations of OPEC for growth of 3.6% in period 2014-2020. The reduced estimated for the global economic growth is the slowing economies in China and Latin America.
The fourteen countries members of the group are negotiation each other, as well as producers outside the cartel, including Russia, to complete successfully the initial agreement in September to limit the total production of crude oil as part of efforts to boost prices. The Brent oil prices collapsed from over 115 USD per barrel in June 2014, amid the global oversaturation of the market and ended last week at value of 45.58 USD per barrel.
“Although there are a glut on the oil market in recent month, it is vital the industry to ensure that lack of investment today will lead to a shortage of supply in the future”, said the Secretary General of OPEC, Mohammed Sanusi Barkindo.
The oil demand in the rich countries of the Organisation for Economic Cooperation and Development (OECD) will start to decline after 2017, partly because of the growth of supply of natural gas, as well as increase of share nuclear and renewable energy. The oil consumption in developing countries will continue to grow, however, as a result of overall growth in demand until at least 2040.
Although the number of cars will increase in OECD countries, the associated oil will decrease by 30%, due to better fuel economy and the increasing usage of electric and hybrid vehicles, supplemented OPEC.
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