Global oil demand seen accelerating next year to 1.34mn bpd, compared with 1.28mn in 2015, led by rising consumption in emerging economies

Bloomberg
London


Saudi Arabia told Opec it raised oil production to a record as the organisation forecast stronger demand for its members’ crude in 2016.
The world’s biggest oil exporter pumped 10.564mn bpd in June, exceeding a previous record set in 1980, according to data the kingdom submitted to the Organisation of Petroleum Exporting Countries. The group sees “a more balanced market” in 2016 as demand for its crude strengths and supply elsewhere falters.
Opec said it expects expanding oil consumption to outpace diminished output growth from rival producers such as US shale drillers, whittling away a supply glut. The strategy is taking time to have an impact, with crude prices remaining 46% below year-ago levels and annual US production forecast to reach a 45-year high.
“Saudi Arabia is still pursuing a market-share strategy,” Torbjoern Kjus, an analyst at DNB in Oslo, said by phone. “They need more oil domestically for air conditioning in the summer, so they could choose to either produce more or reduce exports. Clearly they choose to produce more.”
“Momentum in the global economy, especially in the emerging markets, would contribute further to oil demand growth in the coming year,” Opec’s Vienna-based research department said yesterday in its monthly market report. Demand for the group’s crude will climb in 2016 by 900,000 bpd to average 30.1mn a day, according to the report. That’s still about 1.2mn less than the group estimated it pumped in June.
Even though the market will theoretically be more balanced next year, “you still have to deal with the legacy of oversupply in 2014 to 2015,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas in London. Global markets remain “massively oversupplied,” the International Energy Agency said yesterday.
Opec’s 12 members raised production by 283,200 bpd to a three-year high of 31.378mn a day last month, according to external estimates of output cited by the report. This data included a lower figure for Saudi production of 10.235mn bpd.
There was no total available for data submitted directly by Opec members, because of omissions by Algeria, Libya and Venezuela.
Global oil demand will accelerate next year, to 1.34mn bpd, compared with 1.28mn in 2015, led by rising consumption in emerging economies, according to the report. Supply growth outside Opec will slow to 300,000 bpd in 2016 from 860,000 a day this year with the gain concentrated in the US.
The International Energy Agency estimated demand would grow more slowly next year, with consumption expanding by 1.2mn bpd compared with 1.4mn in 2015, according to its monthly report July 10. The Paris-based adviser forecast no growth in non-Opec supply next year.
World oil demand will average 93.9mn bpd in 2016, while non-Opec supply will total 57.7mn bpd, according to the Opec report.