OPEC Secretary-General Mohammad Barkindo said the outlook for crude market is balancing at an “accelerated pace” and that demand will continue to rapidly grow in the coming decades. Speaking at the Oil & Money conference in London, the head of the Organisation of the Petroleum Exporting Countries cheered the group’s production cuts that came into effect in January and pointed out that there has been a ”massive drainage of oil tanks” across all regions.
He said “I have gauged the industry’s temperature. There is no doubt that we are starting to feel a warmer glow. There is now more talk of a brighter outlook. It is a feeling that has been missing from the industry for far too long. This positivity is underscored by recent data”. OPEC and a group of non-cartel oil producers led by Russia has agreed to cut oil production until the end of March 2018 to tackle the global supply glut that has kept a lid on prices since the summer of 2014. Crude oil is currently trading at $51.65 a barrel, while Brent is at $57.49, both still down around 50% from its 2013-2014 peak.
Barkindo said the OPEC-led productions have now started to bring down the inventories, returning some semblance of stability to the market. But stronger demand for oil is also creating a sense among crude producers that more ambitious gains in price can be achieved. “We expect demand to pass 100 million barrels a day in 2020 and to reach over 111 million barrels a day by 2040,” he said. There is no peak oil demand for the foreseeable future.” OPEC currently forecasts 2017 global demand to be about 96.8 million barrels a day.
