OPEC Raises Demand Forecast for 2015
VIENNA: The OPEC oil raised slightly its world oil demand forecast for 2015, while acknowledging that there remains a supply glut on the market.
In its monthly oil report, OPEC, which pumps out just under a third of the world’s crude, raised global oil demand by 60,000 barrels a day for 2015.
The change would only have a marginal impact on the global demand volume, which is expected to reach 92.5 million barrels a day.
Production by non-OPEC countries is meanwhile expected to remain unchanged at 29.32 million barrels a day. Ministers from the 12-nation cartel are due to meet on June 5. OPEC has set its production at 30 million barrels a day, refusing to turn down the taps despite an oversupply that has brought prices down.
A Gulf industry source, meanwhile, told Reuters that Saudi Arabia raised its crude production in April to a record high, feeding its flourishing Asian market share and its own power plants and refineries.
Saudi Arabia pumped 10.308 million barrels of oil per day in April, compared to 10.29 million bpd in March.
“This is an indication of strong demand, especially from Asia, as well as increasing domestic consumption during summer,” the source said.
The increase underlined Saudi Arabia’s determination not to cede market share to higher-cost producers, such as US shale drillers. The Kingdom and others in the Organization of Petroleum Exporting Countries (OPEC) had resisted cutting production to shore up oil prices.
It also highlights the strength of global demand, which has helped lift refinery profit margins to their highest in years.
Petroleum and Mineral Resources Minister Ali Al-Naimi has said the Kingdom’s output would likely remain around 10 million bpd, and that he was “very positive” about Asian oil demand outlook.
The amount of crude supplied to the market in April was 10.360 million bpd, the source said. Supply to the market, both domestically and for export, may differ from production depending on the movement of oil in and out of storage. April’s output eclipsed the previous recent peak of 10.2 million bpd in August 2013, according to records going back to the early 1980s.
A senior Gulf OPEC delegate recently said the rise in oil prices has been supported by stronger-than-expected demand growth and a slowdown in crude supply, and is likely to continue into the second half of this year.
A rally driven by Middle East conflict and signs the supply glut could ease pushed Brent crude to a 2015 high of $65.31 a barrel on Tuesday, up from $45 in January. Oil prices more than halved last year after reaching $115 a barrel in June.
Saudi Arabia burns more crude to generate power for air conditioning heading into the summer months. It has also been feeding more crude to domestic refineries as it expands its oil products exports.
Direct use of crude last year rose from around 350,000 bpd in March to nearly 900,000 bpd in July, according to the Joint Oil Data Initiative database.
In February 2015, it burnt 315,000 bpd for power generation and domestic refiners processed 2.084 million bpd of crude.