OPEC Raises 2017 World Demand Growth Forecast

OPEC has upgraded its world oil demand forecast to 1.27 million barrels per day, an upwards revision of 10,000 barrels per day.

The increase is said to reflect growing demand from Asia, which is anticipated to lead oil demand growth. China and the US are both expected see an uptick in demand this year, while the Asia-Pacific region is expected to see a decline, CNBC reported.

Total oil consumption in 2017 is expected to stand at 96.32 million barrels per day. The forecasts come as OPEC countries cut oil output in March more than anticipated.

In its monthly market report, OPEC said the group’s production – based on secondary sources used to assess members’ output – dropped 152,700 barrels per day to 31.9m bpd last month, led by declines in Libya, Nigeria, UAE and Iran.

The group’s in-house analysts peg demand for the group’s crude at 32.2 million bpd in 2017, suggesting bulging global inventories should start to tighten this year if their assessment is correct and output levels are maintained, even as a recovery in prices has spurred a jump in production from the US shale patch.

OPEC analysts said stronger seasonal demand should support crude oil heading into the summer months after prices slipped to a year-low below $50 a barrel last month, with traders concerned the group's attempts to tighten the market through a supply deal with non-members like Russia were being overshadowed by the snap back of US production.

The biggest declines came in Libya and Nigeria who are not subject to the output agreement struck late last year due to long-running disruptions caused by violence and political unrest in the countries.

Oil prices have reversed their losses in March, with Brent crude oil hitting a month-high of $56.65 a barrel on Monday. Saudi Arabia, the group's de facto leader, provided numbers directly to OPEC, saying it cut output by 111,0000 barrels a day last month to 9.9 million bpd.

In last month’s OPEC report Saudi Arabia had posted numbers showing it raised output above 10m bpd in a move that briefly unnerved markets, before the kingdom issued a rare statement to explain the output increase was aimed at replenishing domestic inventories, rather than an attempt to increase exports.

The threat from US shale was laid bare in the report, however, with OPEC analysts increasing their forecast for US production growth by 200,000 bpd to 540,000 bpd this year. Total non-OPEC supply was forecast at 580,000 bpd, OPEC said.