In its closely watched Monthly Oil Market Report (MOMR) released on Wednesday (Oct. 13), the Organization of the Petroleum Exporting Countries (OPEC) said that this year’s global oil demand is expected to grow by 5.8 million barrels per day (bpd), down from last month’s estimate of 5.96-million-bpd annual growth.
The cartel cited “lower-than-expected actual data for the first three quarters of this year” as the key reason behind the decision to cut the projection. However, it also noted that “healthy oil demand assumptions going into the final quarter of the year… will be supported by seasonal uptick in petrochemical and heating fuel demand and the potential switch from natural gas to petroleum products due to high gas prices.”
Natural gas prices reached record-high levels as economies reopen after months lockdowns and supply remains tight.
European gas at the Dutch TTF hub on Wednesday stood at a crude oil equivalent of about $177 a barrel, based on the relative value of the same amount of energy from each source, Reuters calculations based on Eikon data showed.
At an industry event in Moscow on Tuesday (Oct. 12) Russian President Vladimir Putin, leader of one of the world’s biggest oil-producing nations, said oil prices could reach $100 a barrel but added that OPEC+ was doing its utmost to bring some stabilization to the market.
West Texas Intermediate crude futures, the U.S. oil benchmark, crossed $80 per barrel last week for the first time since Nov. 2014.
Earlier this month, OPEC+, an alliance between OPEC and other producers led by Russia, decided to stick with its plan formulated in the summer to gradually boost oil production by 0.4m bbl/day each month.
OPEC maintains 2022 demand outlook
The group of oil-producing countries kept its world oil demand outlook for 2022 unchanged from last month at a 4.2m bbl/day increase, with demand seen reaching 100.8m bbl/day for the year. The report noted that the demand is expected to receive support from “healthy” economic momentum in consuming countries, in addition to expectations of better management of the Covid.
OPEC keeps 2021 global growth forecast at 5.6%
The Vienna-headquartered group of oil producers kept its global growth forecast for 2021 and 2022 at 5.6% and 4.2%, respectively. However, the organization lowered its 2021 growth outlook for the United States from 6.1% to 5.8%, while the Eurozone growth forecast was revised upwards from 4.7% to 5%. OPEC also warned that “ongoing robust growth in the world economy continues to be challenged by uncertainties.”
“Additionally, sovereign debt levels in many regions, together with rising inflationary pressures and potential central bank responses, remain key factors requiring close monitoring,” MOMR stressed.
The International Monetary Fund on Tuesday lowered its 2021 global economic growth outlook slightly from its forecast in July on worries supply chain disruptions and rising inflation are holding back the global economic recovery from the Covid-19 crisis.