LONDON (ICIS)--World oil demand in 2018 is projected to grow by 1.59m bbl/day to 98.6m bbl/day, on the back of a steady rise in global economic activities and increased vehicles sales in the US, China and India, according to the latest OPEC Monthly Oil Market Report (MOMR) published on Monday.
Global economic activities, which are projected to increase by 3.8% year on year, the report said, will be one of the drivers of oil demand in 2018, with transportation fuels - namely gasoline, jet fuel and diesel oil - also contributing, driven by steady vehicle sales in the US, India and China.
OPEC also pointed to capacity additions as well as expansions in petrochemical sector projects as a contributing factor to the growth in oil demand, saying they are “expected to provide support to light distillates requirements, mainly in the US, and to a lesser extent in China”.
Some of these factors, however, will be mitigated by a number of factors, OPEC said.
It specified “the level of substitution with other fuels in OECD Americas, Asia Pacific, and the Middle East”, as well as “a steady increase in efficiency gains, and a reduction in subsidies, which are anticipated to reduce oil demand in the Middle East, but mitigated by higher household income”.
“Finally, the degree of digitalisation and technological development in various sectors is also expected to relatively cap oil demand growth in 2018,” it added.
Elsewhere, looking back at 2017, world oil demand growth is estimated to increase by 1.60m bbl/day, representing an upward adjustment of approximately 30,000 bbl/day compared to projections in last month’s report.
The upward adjustment mainly reflects the “continuing better-than-expected data in OECD Europe in Q317”, OPEC said.
In terms of supply, for 2018, the non-OPEC supply forecast was revised up by 320,000 bbl/day to average 59.26m bbl/day, with OPEC attributing the growth to expectations for higher production in the US, Mexico, UK, Brazil and China.
Meanwhile, the OPEC Reference Basket increased for the fifth straight month in January, gaining 7.7% to average $66.85/bbl, the highest monthly average since November 2014.
“Oil prices were supported by continuing efforts by OPEC and participating non-OPEC producers to balance the market and 10 consecutive weeks of crude inventory draws amid healthy economic growth and improving oil demand,” the report said.