Yemisi Izuora
Secretary-General of the Organization of Petroleum Exporting Countries, OPEC Mohammad Barkindo has said that global oil consumption would hit 100 million barrels per day later this year, “much sooner” than earlier projected.
The Cartel and other producers led by Russia last year began withholding 1.8 million barrels per day (bpd) of supplies to tighten the oil market and prop up prices that in 2016 fell to their lowest in more than a decade.
Both Russia and OPEC leader Saudi Arabia have spoken about the need for a gradual increase in oil production as the goal of removing excessive oil stockpiles has now been achieved and the market has been broadly balanced.
“The world will attain the 100 million barrels a day mark of consumption later this year, much sooner than we all earlier projected. Therefore stabilising forces which create conditions conducive to attracting investments are essential,” Barkindo told an oil and power conference in South Africa’s Cape Town.
He added that oil industry confidence was beginning to return and that OPEC was exploring ways of further institutionalising a declaration of cooperation on oil output between OPEC and non-OPEC oil producers.
“Going forward, the priority … is on ensuring stability is sustainable, spreading confidence in the industry and encouraging an environment conducive to the return of investments,” he added.
Meanwhile, Oil prices fell on Thursday as emerging market woes weighed on sentiment, while a deadline neared for a potential new round of U.S. tariffs on another $200 billion of Chinese goods.
U.S. West Texas Intermediate, WTI, crude futures were at $68.47 per barrel down 25 cents, or 0.4 percent, from their last settlement, while the International Brent crude futures fell 27 cents, or 0.4 percent, to $77.0 a barrel, as broad emerging market weakness is weighing on global economic growth prospects.
Meanwhile, a public comment period on possible U.S. tariffs on another $200 billion of Chinese goods ends on Thursday, with expectations that U.S. President Donald Trump will impose the additional levies.
Given that China and emerging markets more broadly are key demand growth areas for oil markets, analysts said crude prices had come under downward pressure.
“The prospects of increased supplies from OPEC and her allies, and weaker demand from China and other emerging markets could weigh further on oil prices going forward, or at least limit the upside potential,” said Fawad Razaqzada, market analyst at futures brokerage Forex.
“In part, this is because of the U.S.-dollar’s strength, weighing heavily on emerging market currencies, including the yuan, which in turn has pushed up the costs of all dollar-denominated commodities,” he added.
For now, however, oil demand remains strong, not least in the United States.
U.S. crude stockpiles fell last week as refineries boosted output amid strong consumption, data from industry group the American Petroleum Institute, API, showed on Wednesday.
Crude inventories fell by 1.17 million barrels to 404.5 million barrels in the week to Aug. 31, while refinery crude runs rose by 198,000 barrels per day, the API data showed.
The producer cartel of the Organization of the Petroleum Exporting Countries (OPEC) said on Wednesday that it expected global oil demand to break through 100 million barrels per day for the first time later this year.
Meanwhile, there are concerns that U.S. sanctions against Iran, which will target the OPEC-member’s oil industry from November, will tighten global supply.