(Ecofin Agency) - The Organization of Petroleum Exporting Countries (OPEC) in its Monthly Oil Market Report on Wednesday increased the global oil demand outlook by 30,000 barrels per day.

According to the group, World oil demand growth in 2016 is expected to average 1.22 million bpd, about 30,000 bpd higher while oil demand outlook for 2017 will increase by 90,000 bpd to 95.41 mln barrels per day.

Non-OPEC oil supply is expected to decrease by 0.79 million bpd in 2016, after a rising revision of 90,000 barrels per day since the previous report, caused by an unexpected increase in output in Q2 of 2016 both in the US and UK.
In 2017, non-OPEC supply will reduce by 0.15 million bpd, following a plunging revision of 40,000 bpd.

Demand for OPEC crude in 2016 is estimated at 31.9 million barrels per day and at 33.0 million bpd in 2017, according to previous report and 1.2 mln barrels a day higher than in 2016, TASS news reports.

OPEC has controlled the price of crude oil for the past 40 years but has been troubled by the continued drop in crude prices since its last meeting in Vienna in June.

The president of the oil cartel, Mohammed al-Sada (photo), has said on Monday that informal talks would be held at an energy conference in September to address the falling oil prices.

“OPEC continues to monitor developments closely, and is in constant deliberations with all member states on ways and means to help restore stability and order to the oil market,” he said adding that the demand for oil is expected to be strong in H2 of the year while petroleum supply would weaken.

“Expectation of higher crude oil demand in the third and fourth quarters of 2016, coupled with decrease in availability, is leading the analysts to conclude that the current bear market is only temporary and oil price would increase during later part of 2016. These are more of an outcome resulting from weaker refinery margins, inventory overhang; particularly of product stocks, timing of Brexit and its impact on the financial futures markets, including that of crude oil,” he added.

Presently, oil prices have dropped below what most OPEC nations need to balance their national budgets.
Brent fell to about $40 a barrel last week but after news of OPEC's informal talks, Brent crude increased by 2.4% to 45.36 per barrel and WTI increased by 2.7% to $42.98 per barrel.

The 14-member cartel may insist on talks in setting new production limits, so as to raise prices as Iran recovers market share after the partial lifting of international sanctions.
 

Anita Fatunji