OPEC: Global oil demand to rise by 1.2m barrels per day in 2015

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KUALA LUMPUR (Apr 17): Global oil demand is anticipated to rise by 1.2 million barrels per day (mb/d), with total growth continuing to come mostly from non-Organisation of Economic Co-operation and Development (OECD) countries, according to the secretary-general of the Organisation of the Petroleum Exporting Countries (OPEC) Abdalla Salem E-Badri.

In a statement to the International Monetary and Financial Committee on April 16, Abdalla said North America in the OECD was the only region expected to see positive growth, driven mainly by an improvement in economic growth in the US.

He said that in OECD Europe and OECD Asia Pacific, oil demand growth was expected to continue to decline but at a slower pace.

He said that demand grew by around 1.0 mb/d in 2014, in line with the initial projection. Lower oil prices and improvement in economic activities in major demand centres resulted in better-than-expected acceleration in oil demand in the 4Q14.

Abdalla said that in the non-OECD, oil demand in Other Asian was expected to be positively affected by India, as more data seems to suggest an improvement in economic activities in the country with transportation fuels leading the growth.

He said that in Latin America and the Middle East, downward risks were currently being observed as governments spending on projects are already reduced and economic activities were anticipated to slow.

“In China, the outlook is balanced with the downside risks of possible ease in economic conditions and policies supporting reduction in transportation fuels consumption.

“A healthy petrochemical industry and expansion projects in the refineries represent the upside potentials for China’s oil demand growth. Overall, non-OECD is expected to remain the main contributor to global oil demand growth, increasing by 1.1 mb/d in 2015,” said Abdalla.

Meawnwhile, on the supply side, Abdalla said the initial forecast for non-OPEC supply output in 2014 has experienced an upward revision to currently stand at 2.2 mb/d, the largest gain since the emergence of shale oil output in the US.

He said much of the growth was due to better-than-expected tight oil output in the US, as well as the Canadian oil sands and oil flow from pre-salt reservoirs in Brazil, while oil production decline from Mexico is seen as higher-than-expected.

He said that North America remained the main driver for the non-OPEC supply growth in 2014.

“Despite declining rig counts from early October, the 4Q14 oil output in the US and Canada, q-o-q, indicates 0.4 mb/d and 0.2 mb/d growth, respectively,” he said.

Abdalla said that based on supply/demand projections, the increase in world oil demand growth is expected to outpace the total of non-OPEC supply and OPEC NGLs growths.

“In February OPEC crude production averaged 30.0 mb/d. Market fundamentals are expected to be more balanced in the second half of this year,” he said.