Oil Demand to Grow in 2018

Oil demand growth is anticipated to be around 1.53 million bpd in 2018, following a marginal upward adjustment compared to last month’s report, with global oil demand now expected to reach 98.51 million bpd, a media report said.

Non-OECD economies will contribute 1.24 million bpd of the demand growth expected in 2018, reported Emirates news agency Wam. The month of December saw OPEC Reference Basket (ORB) average US$62.06 per barrel (/b), its highest since June 2015. On the yearly basis, the ORB averaged US$52.43/b, a gain of 29% or US$11.67/b over the previous year, according the OPEC January Market Review.

Oil prices received wide-ranging support from production adjustment resulting from the Declaration of Cooperation (DoC), strong economic and demand growth, as well as sentiment in the financial markets.

ICE Brent increased US$1.23 at US$64.09/b, while NYMEX WTI increased US$1.28 at US$57.95/b. The spread between ICE Brent and NYMEX WTI spread narrowed slightly to US$6.15/b in December. The Brent, WTI and Dubai market structure held backwardation. Sweet/sour differentials widened in Europe and Asia, and narrowed in the US Gulf Coast.

The global GDP growth forecast remains at 3.7% for both 2017 and 2018. In the meantime, global oil demand growth in 2017 was revised upward by 40,000 b/d to stand at 1.57 million bpd, averaging 96.99 million bpd for 2017. The upward revision was broadly a result of better-than-expected data for OECD Europe and China.

Non- OPEC oil supply growth in 2017 has been revised marginally lower to now stand at 0.77 million bpd. The adjustments were mostly due to revisions in the actual data for 4Q17. For 2018, non- OPEC supply growth was revised up by 0.16 million bpd to now stand at 1.15 million bpd, driven by mostly higher growth expectations for the US and Canada.

OPEC NGLs are also expected to grow by 0.18 million bpd in 2018, compared to 0.17 million bpd growth in the previous year. OPEC production in December, according to secondary sources, is expected to increase by 42,000 b/d to average 32.42 million bpd.

OPEC crude in 2017 is estimated at 32.9 million bpd, which is 0.6 million bpd higher than 2016. In 2018, OPEC crude is projected at 33.1 million bpd, about 0.2 million bpd higher than in the previous year.