OPEC revises down oil demand forecasts for second month running

LONDON (ICIS)–OPEC has cut its forecast for global crude oil demand growth in 2018 and 2019 for the second month in a row, on the back of further weaker-than-expected demand from the Middle East and China during the third quarter.

The oil bloc said in its monthly oil market report (MOMR), which it published on Tuesday, that it had revised downwards its projection for 2018 crude oil demand growth by 40,000 bbl/day to 1.50m bbl/day.

For the year as a whole, oil demand is anticipated to reach 98.79m bbl/day.

In 2019, meanwhile, OPEC is forecasting oil demand growth of 1.29m bbl/day, which represents a 70,000 bbl/day downward revision compared to October’s MOMR. Total world consumption in 2019 is projected to be 100.08m bbl/day.

“The OECD region will contribute positively to oil demand growth, increasing by 0.25 mb/d year on year, while the non-OECD region is assumed to see larger growth by 1.04 mb/d in 2019,” the bloc said.

In terms of supply, non-OPEC oil supply growth is estimated to stand at 2.31m bbl/day in 2018, an upward revision of 90,000 bbl/day from the previous month’s assessment, driven by strong performances in the US, Canada, Kazakhstan and Russia.

For 2019, non-OPEC oil supply growth was revised up by 120,000 bbl/day from the previous month, forecast to stand at 2.23m bbl/day and is now projected to reach an average of 62.09m bbl/day.

Elsewhere, the OPEC Reference Basket ended October higher, increasing by $2.21, or 2.9% month on month, to average $79.39/bbl, the highest monthly average in four years.

“Crude oil futures also peaked in early October, hitting a four-year high, with ICE Brent reaching $86.29/bbl, as the market focused on concerns over potential oil supply shortages.

“ICE Brent increased by $1.52 month on month, or 2%, reaching $80.63/bbl in October, while NYMEX WTI rose by $0.67 month on month, or 1.0%, averaging $70.76/bbl.”

While OPEC maintained its global economic growth forecast for 2018 at 3.7%, it revised down its projections for 2019 by 0.1 percentage points to stand at 3.5% on the back of “a slowing dynamic amid rising trade tensions, monetary tightening…and mounting challenges in emerging markets and developing economies”.

OPEC also revised down growth expectations in the eurozone to 1.9% for 2018 and 1.7% for 2019.

(Pictured: Marathon oil refinery, Detroit, Michigan, USA. Source:  Jim West/imageBROKER/REX/Shutterstock)