VIENNA: OPEC has raised its world oil demand forecast for 2014 on the back of an increase in US consumption in late 2013 and a “gradual” global economic upswing.
The Organization of Petroleum Exporting Countries now expects world demand of 91.1 million barrels per day (mbd) this year, 1.1 mbd more than in 2013, it said in its new monthly report.
Previously OPEC, which produces about 35 percent of the world’s oil, had expected demand to grow by 1.09 mbd. For 2013 OPEC also raised its demand estimate to 90.0 mbd from 89.9 mbd in its last monthly report.
US oil consumption showed a “significant increase” in December, and although preliminary weekly data for January and February showed “mixed signals,” demand growth stayed “healthy” in January, OPEC said.
After falling in 2013, in Europe there were signs of “stabilization” in the final quarter, but a fall in demand both there and in the Asia-Pacific region is still expected in 2014, it said.
“The assumption that the global economy will see a gradual recovery in 2014, led by growth acceleration in the major … economies, remains valid,” OPEC said.
“This is despite softening economic indicators at the beginning of the year, particularly in the US and China, which have highlighted some fragility in the on-going momentum.”
A “gradual” recovery in the eurozone seems to be on track, it said, while India’s economy also appears to be continuing to recover from the low growth levels seen in the past year.
US crude oil fell by more than 2 percent, its biggest drop in two months, after the US announced unexpected plans for a “test” release of strategic oil reserves while weekly data showed a big rise in crude stockpiles.
European benchmark Brent prices slipped modestly, widening the closely watched Brent/WTI spread for a third day, but the main focus was on the US contract after a double dose of bearish supply news.
US crude fell by $2.48 to a session low of $97.55 per barrel, below the 50-day moving average of $98.32 by midday. It was last trading $2.26 lower at $97.77 a barrel by 1723 GMT.
Brent crude oil futures fell 72 cents to $107.82 per barrel.
Brent’s premium over US crude widened by $1.56 to trade at $10.07, the first time it has been above $10 since the end of January.
Brent drew some support from turmoil in Libya, where the parliament voted Prime Minister Ali Zeidan out of office after rebels humiliated the government by loading crude on a tanker that fled from naval forces.