Lagos — Despite lower economic growth rates across the world, the Organization for the Petroleum Exporting Countries, OPEC, has forecast a growth of 1.2 million barrels per day in global oil demand for the second half of this year.
The group’s Monthly Oil Market Report, MOMR for June, said world oil demand growth will improve “seasonally”, from the sluggish performance seen in 1H19, with growth in 2H19 forecast at 1.2 mb/d y-o-y.
Out of the 1.2mb/d boost, the Organisation for Economic Co-operation and Development, OECD region is forecast to increase by 0.2 mb/d y-o-y in 2H19, on the back of growth in OECD Americas, driven by solid light distillate demand.
In contrast, OECD Europe is forecast to contract due to slower economic momentum, while OECD Asia Pacific will decline on lower petrochemical feedstock demand.
In the non-OECD region, oil demand is projected to increase by 1.0 mb/d y-o-y in 2H19 supported mainly by Other Asia, particularly India.
Oil demand in China is expected to continue growing despite economic concerns and sharply lower vehicle sales.
Growth in transportation fuels, particularly aviation fuels, as well as in petrochemical feedstock should outweigh declines elsewhere in 2H19.
However, OPEC said significant downside risks from escalating trade disputes spilling over to global demand growth remain.
Non-OPEC oil supply in 2H19 is forecast to increase by 1.8 mb/d, compared to 1H19 and to increase by 2.1 mb/d y-o-y, which is less than the growth seen over the same period a year earlier.
The non-OPEC supply growth slowed slightly in 1H19 due to take-away capacity restrictions in the Permian Basin in the US, mandatory production limitations in Canada, and heavy maintenance operations elsewhere.
For 2H19, non-OPEC supply growth is anticipated to show further upside potential, with higher production expected in the US, as well as production increase in Brazil and possibly the start-up of Norway’s Johan Sverdrup field in the North Sea, leading to a growth forecast of 2.14 mb/d for 2019, the report said.
In summary, the observed slowdown in the global economy in 1H19 will further be challenged in 2H19, mainly by mounting trade disputes, with the impact on oil demand growth remaining uncertain.
“While growth in non-OPEC supply continues, the extent of additional production in key regions in 2H19 will mainly depend on volumes of start- and ramp-ups”.
“The upcoming OPEC and non-OPEC Ministerial Meetings will carefully consider these developments, in order to ensure continued market stability”.