{OPEC} cuts oil demand forecasts and expects support from gas prices

{OPEC} cuts oil demand forecasts and expects support from gas prices
{OPEC} cuts oil demand forecasts and expects support from gas prices
The Organization of the Petroleum Exporting Countries (OPEC) lowered its forecast for global oil demand growth in 2021 and kept its forecast for next year, according to its monthly report on Wednesday. However, she said, the increase in natural gas prices may support the demand for oil products as the end user shifts towards them.
The organization now expects oil demand to grow by 5.82 million barrels per day, down from 5.96 million barrels per day in its previous forecast, and says that the downward revision came for the most important reasons, the most important of which is the data of the first three quarters of the year.
The organization maintained its forecast for demand growth of 4.2 million barrels per day next year. But it said record-high natural gas prices may provide a potential support for oil demand growth as industrial users switch to oil products instead of gas.
“If this trend continues, fuels such as fuel oil, diesel and naphtha may see support due to higher demand for electricity generation, refining and the use of petrochemicals,” OPEC said.
Amin Al-Nasser, CEO of the Saudi state oil company , predicted last week that the increase in demand resulting from the switch from gas to oil would be about 500,000 barrels per day.
And this month, the “OPEC Plus” bloc, which includes “OPEC” and independent producers led by Russia, agreed to abide by its plan to increase production by 400,000 barrels per day in November, as it gradually reduces production cuts that it had previously implemented with the aim of supporting low prices.
In its report, OPEC raised its forecast for demand in 2021 for its crude oil by 100,000 barrels per day to 27.8 million barrels per day, and by another 100,000 barrels for 2022 to 28.8 million barrels per day.
It said its production in September increased by 490,000 barrels per day to 27.33 million barrels per day, according to secondary sources.
In an indication of the increased demand in the oil market, OPEC said that the commercial stocks of the Organization for Economic Cooperation and Development decreased by 19.5 million barrels in August compared to the previous month, to 2.855 billion barrels, according to preliminary data.
OPEC stated that this figure is 183 million barrels less than the average of the last five years, and 131 million barrels less than the average for the period between 2015 and 2019.
Oil prices fell during trading on Wednesday, after a mixed end in the previous session, amid fears that the rise in coal and natural gas prices in China, India and Europe would increase inflation and slow the pace of global growth, limiting demand for oil.
The rise in the price of the dollar, which reached near its highest level in a year, also affected prices, which makes oil more expensive for holders of other currencies.
US West Texas crude futures fell 71 cents, or 0.9 percent, to $79.93 a barrel at 02:47 GMT, after rising 12 cents on Tuesday. As for Brent crude contracts, they fell 70 cents, or 0.8 percent, to $ 82.72 a barrel, extending its losses, which amounted to 23 cents, on Tuesday.
The International Monetary Fund on Tuesday lowered its growth forecast for the United States and other major economies on concerns that disruptions in supply and supply chains, as well as cost pressures, will disrupt the global economic recovery from the Corona virus pandemic.
For his part, Iraqi Oil Minister Ihsan Abdul-Jabbar said at an energy conference in Moscow yesterday that it is unlikely that oil prices will continue to rise, after they recently recorded their highest levels in years.
The Organization of the Petroleum Exporting Countries (OPEC), Russia and other allies, the group known as OPEC Plus, have resisted calls to raise production at a faster pace and stuck to their previous plan to raise production by 400,000 barrels per day from November 1. This pushed crude prices to their highest level in three years, which increased inflationary pressures in the world.
In response to a question about whether “OPEC Plus” should produce more oil than was planned, Abdul-Jabbar said: “The market must be balanced… We believe that the price will not rise.”

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