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ON THE RIGHT: Increased demand for oil worldwide

Organisation of Petroleum Exporting Countries

ON THE RIGHT: Increased demand for oil worldwide

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Are higher oil prices threatening Barbados’ economic recovery?


World oil demand was revised marginally up by 10 000 barrels, to average 1.25 million barrels per day (mb/d) in 2016; as a result, total oil demand stood at 94.44 mb/d.

This upward revision was broadly due to better-than-expected data in the Organisation for Economic Cooperation and Development (OECD) region.

The additional gains in petrochemical feedstock demand along with heating fuel requirements due to colder-than-expected snaps have supported oil demand in both OECD Asia Pacific and Europe.

Oil demand growth for 2017 is expected to be around 1.16 mb/d, slightly up from the previous month’s report, to reach 95.60 mb/d.

Positive upward revisions were focused on OECD Europe, as a result of expect cold weather and improvement in transportation fuel requirements.

Other Asia was revised downward in the first half of 2017, following the demonetisation policy weighing on the economy and thus oil requirements.

Preliminary data indicates that the world’s oil supply decreased in December by 0.30 mb/d month on month to average 96.92 mb/d, but higher by 0.71 mb/d, year on year.

Non-OPEC oil supply is estimated to have averaged 57.14 mb/d in 2016, a contraction of 0.71 mb/d year on year, and representing an upward revision of 70 000 barrels per day (tb/d), driven mainly by more growth in Norway, Russia and the United States (US) in the fourth quarter of 2016.

In 2017, non-OPEC oil supply is projected to grow by 0.12 mb/d, following a downward revision of 0.18 mb/d, driven by Russia, Kazakhstan, China, Congo and Norway, to average 57.26 mb/d, partially due to the planned production adjustments in the first half of 2017 in line with OPEC – non-OPEC cooperation.

However, the US forecast for 2017 was revised up by 0.23 mb/d, following higher rig counts and stronger cash flows.

OPEC natural gas liquids (NGLs)production is forecast to grow by 0.15 mb/d in 2017 to average 6.24 mb/d, following growth of 0.15 mb/d in 2016.

A decrease in both non-OPEC supply, including OPEC NGLs, of 0.08 mb/d and in OPEC crude production of 0.22 mb/d reduced overall global oil output in December.

The share of OPEC crude oil in total global production stood at 34.1 per cent in December, a decrease of 0.1 per cent from the month before.

Estimates are based on preliminary data for non-OPEC supply, direct communication for OPEC NGLs and non-conventional liquids, and secondary sources for OPEC crude oil production.

Demand for OPEC crude in 2016 stands at 31.2 mb/d, which is 1.8 mb/d higher than 2015 level. In 2017, the demand for OPEC crude is projected at 32.1 mb/d, around 0.9 mb/d more than this year.

For 2017, demand for OPEC crude is projected to increase by 0.9 mb/d to average 32.1 mb/d.

The first and the second quarters are expected to increase by 1.6 mb/d and 0.4 mb/d, respectively, while the third and the fourth quarters are projected to increase by 0.7 mb/d and 0.9 mb/d, respectively, versus the same quarters this year.