The Organization of Petroleum Exporting Countries cut its expectations on Wednesday for global oil demand growth in 2016 and cautioned of further decreases noting concern over Latin America and China, pointing to a bigger supply surplus this year.
OPEC also reported that top exporter Saudi Arabia froze output in March, which is an indication that Riyadh is serious about a plan to be tackled this weekend to freeze output and support prices, while the Organization of Petroleum Exporting Countries supply overall surged moderately.
Global demand will climb by 1.20 million barrels per day in 2016, the OPEC indicated in its monthly report, 50,000 barrels per day less than anticipated earlier.
It also noted the impact of warmer weather and the removal of fuel subsidies in some countries.
According to OPEC, “Economic developments in Latin America and China are of concern. Current negative factors seem to outweigh positive ones and possibly imply downward revisions in oil demand growth, should existing signs persist going forward.”
The Organization of Petroleum Exporting Countries’ view contrasts with that of the United States Energy Information Administration, which modestly elevated its demand forecast on Tuesday.
A huge slowdown in demand could complicate producers’ efforts to boost prices by keeping output at January levels. The plan which will be tackled on Sunday in Qatar has supported oil prices to gain above $41 per barrel from a 12 year low close to $27 hit in January.
The organization’s refusal to slash output in late 2014 helped recover a plunge in prices, which is declining the development of relativity expense rival supply sources such as United States shale oil and other projects around the world.
In OPEC’s report, they said that they anticipated supply from outside the group to slump by 730,000 barrels per day this year, more than the 700,000 barrels per day fall forecasted previously.
However, OPEC restated that producer efforts to keep output were making the estimates uncertain.
Despite the bigger non-OPEC dip expected, the Organization of Petroleum Exporting Countries forecasts demand for its crude will average 31.46 million barrels per day in 2016, dipping 60,000 barrels per day from last month’s estimate.
The group pumped 32.25 million barrels per day in March, soaring 15,000 barrels per day from February.
Saudi Arabia told OPEC it kept output in March steady at 10.22 million barrels per day. Qatar in February struck a preliminary deal with fellow OPEC members, Qatar and Venezuela, including non-OPEC member Russia, to cut output.
Meanwhile, Iran told OPEC it elevated output by 15,000 barrels per day to 3.40 million barrels per day.