OPEC revised global oil demand growth for 2017 higher by around 35 tb/d to 95.81 mb/d, the OPEC monthly oil market report said.
This was a result of colder weather conditions and healthy vehicle sales in OECD Europe, in addition to improve assumptions for petrochemical feedstock requirements in OECD Asia Pacific.
World oil demand is now anticipated to increase by 1.19 mb/d to average 95.81 mb/d.
Total oil demand is now estimated to average 94.62 mb/d, which is 0.18 mb/d higher than previous estimate of 94.44 mb/d.
In 2017, demand for OPEC crude is projected to average 32.1 mb/d, around 0.8 mb/d higher than last year.
For 2017, the forecast for non-OPEC supply growth was revised up by 120 tb/d to average 57.44 mb/d, representing growth of 0.24 mb/d.
Total US liquids production in 2017 is forecast to grow by 0.24 mb/d to average 13.88 mb/d. This forecast has been revised up by 0.16 mb/d compared to January’s MOMR due to recent drilling activities.
A leading analyst of the National Energy Security Fund, a lecturer at the Financial University under the Government of the Russian Federation, Igor Yushkov, speaking to Vestnik Kavkaza, noted that low oil prices naturally led to the oil demand growth. "The cheaper oil was due to the predominance of supply over demand, the greater demand was. In 2015-2016 it was growing particularly fast, as everyone either buy oil in advance, as long as it was cheap, or its consumption increased. The main drivers of growth were India, China and the US," he said.
He predicted that in the near future the oil demand growth will decline due to rising prices. "If oil prices keep at $55 per barrel for the whole year, perhaps, the growth rate will decline, but still remain high. I think that China will increase the demand, as now there is a redistribution in its economy: China is reducing production of its own oil and is buying more foreign oil," Igor Yushkov stressed.
An associate professor of the Graduate School of Corporate Management of RANEPA, Ivan Kapitonov, also said that China and the growth of its economy is the main driver of increased demand.
The expert explained that such positive figures are a good sign. "It allows us to assume that oil prices may even grow till the end of the year and reach or, perhaps, even exceed $70," he stressed.
