OPEC predicts increase in global oil demand growth in 2016
VIENNA - OPEC on Monday revised upward its forecast for global crude oil demand growth for this year and also predicted a further increase for 2016 as the world economy picks up again.
But the Organization of the Petroleum Exporting Countries warned that oil output would also continue to increase this year, which means the current supply glut and low prices are likely to remain unchanged until next year.
In its July monthly report, OPEC said it expected global oil demand to increase by 1.28 million barrels per day -- some 100,000 barrels more than in its June estimates.
In 2016, demand growth is expected to hit 1.34 million barrels per day thanks to global GPD growth set to reach 3.5 percent, up from 3.2 percent this year.
Total oil consumption should be 93.94 million barrels per day in 2016, the OPEC report noted.
However, the organisation also warned that a number of market challenges remained, including "still high unemployment in the eurozone in combination with the uncertainties in Greece, expectations of rising interest rates in the US, overcapacity amid a slowing economy in China, and on-going geopolitical issues".
OPEC's latest figures differ from those of the International Energy Agency, which indicated last week that world oil demand growth would fall to 1.2 million barrels a day in 2016, from 1.4 million this year.
Oil prices collapsed 60 percent between last June and January when it hit a low of $45. This was due in part to a supply glut caused by the boom in US shale oil.
But OPEC, which has traditionally defended price levels by cutting output if needed, dramatically switched strategy last November when it opted to leave its production target unchanged.
At its bi-annual production meeting last month in Vienna, OPEC stuck to this strategy, keeping its output target unchanged at 30 million barrels per day.
This is seen as an attempt to maintain market share and put pressure on US shale oil producers, which need a higher oil price to be profitable than with traditional extraction methods -- a strategy that experts say has had some success.
Oil prices fell in Asia on Monday in light of a possible nuclear deal between Iran and six world powers, which would see sanctions lifted on Iranian oil exports.