OPEC Raises Global Demand Forecast

The Organization of Petroleum Exporting Countries raised its forecast for global oil demand next year and through the end of the decade, anticipating that cheaper crude will spur consumption even as economic growth slows.

Demand will reach 95.3 million barrels a day in 2017, according to the producer group’s annual World Oil Outlook report released Tuesday, Bloomberg reported.

That is an increase of 300,000 barrels a day from last year’s forecast.

OPEC also raised its outlook for oil use in 2018-2020, when it sees demand reaching 98.3 million barrels a day, or 900,000 more than the group projected in its previous annual outlook.

OPEC cut its estimates for crude prices by $20 a barrel for each year from 2016 to 2020, compared with its previous outlook. The group assumes crude will average $40 a barrel in 2016, and it raised its projected price by $5 a barrel in each of the following years through 2020. Brent has averaged about $44 a barrel so far this year.

OPEC’s upward revision for demand “is the result of a lower medium-term oil price assumption, which is expected to have a stronger influence than assumptions of lower medium-term economic growth and expanded energy efficiency policies,” the report’s researchers said.

Benchmark Brent crude tumbled from more than $115 a barrel in June 2014 amid a supply glut and ended last week trading 8.3% lower at $45.58.

Exploration for new crude deposits has declined with prices, prompting concern that producers may not be able to meet future demand.