OPEC sees lower demand for its oil in 2016

OPEC lowered its estimate of global demand for its crude in 2016, which is now seen to increase by just 100,000 barrels per day (bpd) to a new average of 31.5 million barrels per day (mbd), the cartel said in its latest monthly report.

The forecast comes after the outlook for global economic growth this year was revised down due to expected contractions in Russia and Brazil.

The producer group maintained its forecast for global oil demand growth in 2016 at around 1.25 mbd to an average over 94.23 mbd.

Within the Middle East, Saudi Arabia is seen to be the main contributor of demand growth this year, contributing to a rise of 100,000 bpd, despite flat oil demand growth numbers in January 2016.

In Iraq, oil demand increased by more than 6 percent YoY. Consumption has also increased in Kuwait, Qatar and the United Arab Emirates.

Oil imports from China fell by 1.53 mbd month-on-month in January. Saudi Arabia, Russia and Angola were the top suppliers to China during the month, accounting for 16 percent, 13 percent and 11 percent, respectively.

In February, OPEC’s crude production decreased by 175,000 bpd to average 32.28 mbd on lower output from Iraq, Nigeria and the UAE.

Saudi Arabia’s crude output, however, increased slightly month-on-month to 10.14 mbd in February.

Non-OPEC oil supply is expected to contract by 700,000 bpd to average 56.39 mbd in 2016.

“Non-OPEC oil supply for 2016, despite several upward and downward revisions, remained unchanged to contract by 0.70 mb/d and average 56.39 mb/d compared to last month. However, this forecast is subject to many uncertainties,” the cartel said, adding that non-OPEC supply in Q1-2016 was higher-than-expected.

Write to Joumana Saad at joumana.saad@argaamplus.com and

Abeer Allam at abeer.allam@argaam.com