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.
“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.