Opec, the crude oil exporters' group, maintained its outlook for oil demand in 2022 but said there is an “upside potential to the forecast”, as global economies continue to recover strongly from the coronavirus pandemic-induced headwinds.
The group maintained its oil demand forecast for this year at 4.2 million barrels per day, unchanged from the previous month's forecast.
World consumption is expected to surpass the 100m bpd mark in the third quarter.
“Upside potential to the forecast prevails, based on an ongoing observed strong economic recovery with the GDP already reaching pre-pandemic levels, supported by fiscal stimulus, and global trade levels reaching an all-time high in volume terms,” Opec said in its monthly market report on Thursday.
The global economy is expected to grow 4.4 per cent this year, the International Monetary Fund said its latest World Economic Outlook last month.
Global trade is also bouncing back and rose 2.4 per cent on the previous month to exceed pre-pandemic levels, despite major supply chain disruptions and surge in Omicron cases, Kiel Trade Indicator data show.
“In most European countries, lockdowns and other restrictions are easing. Similarly, in the US, the Covid-19 pandemic has been well contained through vaccinations and other containment measures,” Opec said, and added that demand for jet kerosene will rise in 2022 as air travel bounces back from the pandemic.
Higher demand for LPG is also predicted, as the “household and industrial sectors continue to pick up, particularly in non-OECD Asia, India and China".
Oil prices have rallied to their highest levels since 2014 on tighter supply, higher demand and production constraints.
Brent, the global benchmark for two thirds of the world's oil, was trading at $92.52 per barrel at 6.53pm UAE time on Thursday, while West Texas Intermediate, the gauge that tracks US crude, was at $90.89 per barrel.
Geopolitical tension over Ukraine and the inability of some Opec member countries to quickly increase production are also supporting oil prices.
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Russian and Belarus troops held joint combat training at firing ranges in Belarus as tensions remain high under the looming threat of war with Ukraine. AP Photo -
A soldier drives an armoured vehicle at Brestsky firing range, Belarus. AP Photo -
A Ukrainian serviceman carries out checks not far from the pro-Russian militant-controlled city of Donetsk, Ukraine. EPA -
A Russian military vehicle drives off a railway platform after arriving in Belarus. AP Photo -
A soldier takes aim during a Russian and Belarusian military drill at Brestsky firing range. AP Photo -
A Ukrainian serviceman repairs a shelter near Donetsk, Ukraine. EPA -
Aircraft are lined up on 'USS Harry S Truman' in the Adriatic Sea. The Truman strike group is operating under Nato command and control along with several other Nato allies for co-ordinated maritime manoeuvres, anti-submarine warfare training and long-range training. Reuters -
Russian soldiers attend the Yurginsky training ground in the Kemerovo region, Russia. AP Photo -
A Ukrainian serviceman lays flowers where one of his friends was killed in 2017 near Avdiivka. Anatolii Stepanov / AFP -
A Ukrainian serviceman stands guard in a dugout on the frontline with the Russia-backed separatists near Avdiivka. AFP -
This satellite image shows troops gathered at a training ground in Pogonovo, Russia. AP Photo
“Oil consumption is likely to hit 100m bpd by the summer as pent-up demand for travel is unleashed globally, more or less in line with Opec’s forecasts,” Rystad Energy’s senior oil market analyst Louise Dickson said in a note on Thursday.
“However, the rosy outlook for oil demand is only one factor in the equation pushing oil prices higher. Oil supply is tight and spare capacity is sparse, creating a tight market environment with a bullish impact on prices,” she added.
The Opec+ group has decided to add 400,000 barrels of oil per day to the market in March as demand continues to pick up amid the global economic recovery.
