Opec on Tuesday stuck to its oil demand outlook for this year and next and said it expected China’s stimulus measures to revive growth in the world's second-largest economy.
The oil producers' group expects demand to rise by 2.4 million barrels per day to 102.1 million bpd this year. Next year, world oil demand is forecast to expand by 2.2 million bpd to 104.3 million bpd, Opec said in its monthly oil market report.
“The ongoing global economic growth is forecast to drive oil demand, especially given the recovery in tourism, air travel and steady driving mobility,” the group said.
“In China, the prospect of counterbalancing measures by the government will likely support the economy in achieving this year’s growth target."
The Asian country's post-coronavirus economic recovery has lost momentum mainly due to a deepening property slump and weak consumer spending.
China, the world’s largest crude importer, has announced a string of stimulus measures over the past few weeks, including halving the stamp duty on stock transactions and easing mortgage rates.
Its oil demand in July grew by 2 million bpd for the third consecutive month, driven by higher demand for transport fuels and continuing recovery in air travel, Opec said.
In the Organisation for Economic Co-operation and Development (OECD) region, oil demand is estimated to rise by 120,000 bpd this year to average 46.1 million bpd.
“OECD Americas is expected to witness the largest regional rise, led by the US, on the back of growing jet fuel demand and expanding gasoline requirements,” Opec said.
“Light distillates are also projected to support demand growth this year.”
In the non-OECD countries, total oil demand is expected to rise by about 2.3 million bpd to 55.9 million bpd this year.
Oil prices are trading close to one-year highs after Opec members Saudi Arabia and Russia said they would extend supply cuts of a combined 1.3 million bpd to the end of the year.
As part of their voluntary cuts, the kingdom is extending its one million bpd output reduction until December, while Russia is rolling over its export cut of 300,000 bpd until the end of the year.
On Tuesday, Opec said its production is projected to grow by about 50,000 bpd to 5.44 million bpd this year before rising further to 5.51 million bpd in 2024.
The group’s crude oil output rose by 113,000 bpd in August, compared with July, to 27.45 million bpd, Opec said, citing secondary sources.
Meanwhile, non-Opec production is estimated to expand by 1.6 million bpd to reach 67.4 million bpd this year amid higher output from Russia, the US and Brazil.
"Slow and steady growth is currently expected for US shale oil production throughout the year. Accordingly, US liquids supply growth for 2023 is forecast at 1.2 million bpd," the group said.
"There [are] uncertainties related to US shale oil output potential and unplanned maintenance across the rest of the year."
Opec left its economic growth forecast unchanged at 2.7 per cent for this year and at 2.6 per cent for the next.
The group said the downside risks included high inflation, possibility of further monetary tightening, and the continuation of Russia's war in Ukraine.
"Potential for positive developments could arise from a less pronounced inflationary environment, allowing central banks to maintain accommodating monetary policies towards the end of this year and in 2024," Opec said.
Brent, the benchmark for two thirds of the world’s oil, settled above $92 a barrel at market close on Tuesday and was at the same level in early trading on Wednesday. West Texas Intermediate, the gauge that tracks US crude, ended Tuesday at $88.84 a barrel and was hovering at about $89 a barrel in early trading on Wednesday.