Global oil demand will increase in 2018

OPEC expects that it would increase by 1.59 million barrels per day (bpd), an increase of 60,000 bpd compared to the previous estimate.

 The Organization of the Petroleum Exporting Countries (OPEC) assured this Monday that global oil demand will increase at a faster pace than expected in 2018 due to the strength of the global economy, boosting the group's efforts to reduce oversupply through supply cuts.

The global market will only reach equilibrium by the end of 2018 as higher prices are encouraging the United States and other non-OPEC nations to increase their oil production, the cartel said in its monthly report. 

In addition to this, the organization stated that global crude demand would rise by 1.59 million barrels per day (bpd) this year, an increase of 60,000 bpd compared to the previous estimate.

«Recently, the healthy and steady economic development in key crude consumption centers has been an important factor in generating a strong increase in oil demand,» said the Vienna-based group. «This close link between economic growth and oil demand will continue in the future, at least in the short term,» it added.

Oil prices were little changed after the report was released, maintaining their previous gains to trade just below $64 per barrel. Crude surpassed the $70 per barrel threshold this year for the first time since late 2014.

Balancing the forecast for higher demand, OPEC said that external producers would raise supply by 1.4 million bpd this year. The figure represents an increase of 250,000 bpd from last month's estimate and the third consecutive rise since the calculation of an increase of 870,000 bpd in November.

«The constant recovery of oil prices since the summer (northern) of 2017 and the renewed interest in growth opportunities have led major oil companies to increase exploration activity this year, both in the shale industry and in deepwater offshore,» OPEC said in its report, referring to the pumping landscape in the United States. «The market would only return to equilibrium by the end of this year,» it stated.

The compliance of the 11 members of the organization subject to production quotas rose to 137 percent, according to a Thomson Reuters calculation based on the group's figures, up from the 129 percent estimated in December.