Oil demand may rise by 5.9 mln bpd if prices stabilize

Global demand for oil may increase by 5.9 million barrels per day (bpd) over the next five years if crude prices stabilize to a range of $55 to $75 per barrel (bbl), Bank of America Merrill Lynch (BofAML) said in a new report.

Brent Crude has plunged to 12-year lows in recent months, while the share of energy consumption in terms of global GDP is down to 2.6 percent, the lowest level since 1998, the report pointed out.

“We believe that the structure of crude oil prices has fallen too far and we see global crude oil prices averaging $55-75/bbl over the next five years,” BofAML predicted.

The report also highlighted strong demand seen last year, despite declining oil prices.

“The price collapse has also lead to the second best year for demand in more than decade, with growth jumping to 1.7 million bpd in 2015,” the bank said, adding that it continues to “believe falling oil prices are mostly a supply story driven by the advent of shale technology.”

The bank also expects to see a 4.8 million bpd decline in crude stocks from non-OPEC producers by 2020, if oil prices stay at around $30/bbl.

However, the report also warned of “significant risks” that could change such forecasts, which include OPEC’s policy decisions on output, the long-term impact of lower oil prices on global demand, as well as technology changes that could impact the “global oil cost curve”.