Global oil demand is still robust and will be such through the end of this year, OPEC Secretary General Haitham al-Ghais told Reuters, noting that the recent sell-off in oil doesn't reflect fundamentals and is driven by fear.
"We still feel very bullish on demand and very optimistic on demand for the rest of this year," al-Ghais told Reuters in an interview published on Thursday.
Oil prices dropped earlier this month to their lowest level in six months, to the level just before the Russian invasion of Ukraine. The move lower was driven by fears of recession and concerns about the health of the Chinese economy and was further exacerbated by thin trading volumes as traders and speculators are either on vacation or not trading oil amid heightened volatility.
OPEC, however, sees robust demand, according to its new secretary general.
"There is a lot of speculation and anxiety, and that's what's predominantly driving the drop in prices," al-Ghais told Reuters.
"Whereas in the physical market we see things much differently. Demand is still robust," OPEC's chief added.
Fears of a major Chinese economic slowdown are overblown, according to al-Ghais.
OPEC did revise down last week its global oil demand growth estimate for this year by 260,000 barrels per day (bpd) but said in its closely-watched Monthly Oil Market Report (MOMR) it still expects "healthy growth".
OPEC sees world oil demand growing by 3.1 million bpd this year, down by 260,000 bpd from last month's growth assessment of 3.36 million bpd growth.
Demand is still expected to show "healthy growth of 3.1 mb/d, including the recently observed trend of burning more crude in power generation," OPEC said. This year, total oil demand is expected to average around 100 million bpd.
OPEC left its 2023 demand growth estimate unchanged from the previous report at 2.7 million bpd, with total 2023 oil demand expected to reach 102.72 million bpd.
"In 2023, expectations for healthy global economic growth, combined with expected improvements in the containment of COVID-19 in China, are expected to boost consumption of oil," OPEC said last week.
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com:
- Oil Jumps On Massive Crude Inventory Draw
- WTI Crude Falls To Lowest Level Since January
- Natural Gas Demand Outpaces Production