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OPEC expects global oil demand to grow at a daily rate of 1.5 million bpd this year, further slowing down to 1.29 million bpd in 2019, the organization said in the latest issue of its Monthly Oil Market Report. This is 40,000 bpd and 70,000 bpd lower in demand growth projections for 2018 and 2019, respectively, from last month’s report.
This is the fourth downward oil demand growth revision from the Organization of Petroleum Exporting Countries in as many months, suggesting that the worry about demand has caught up with the cartel that supplies most of the world’s oil.
What’s more, the downward revisions are getting larger: in the October Monthly Oil Market Report, OPEC revised down its global oil demand growth projection by 80,000 bpd from the September estimate, which, in turn, was 20,000 bpd lower than the August figure.
Interestingly, the downward demand revisions are accompanied by unchanged global economic growth forecasts. Usually, downward revisions in economic growth prospects go hand in hand with lower oil demand projections, but not this time, it seems. As to the reasons for this latest revision, OPEC said it was based on weaker demand figures from the Middle East, and to a lesser extent, China for the third quarter of 2018, when Chinese refineries were in maintenance season.
Yet China is the biggest concern for Middle Eastern producers when it comes to oil demand. Back in September, CNBC quoted the oil ministers of Oman and Bahrain both expressing concern with projections about falling Chinese oil demand resulting from the trade war with the Trump administration.
This concern may ease over the longer term as the Chinese economy continues to grow at a stable rate, which drives greater oil consumption, but over the short term it has had OPEC worried and rightly so as the tension between Beijing and Washington persists.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.