VIENNA/LONDON — OPEC on Tuesday revised upward its growth forecast for global oil demand in 2015 and maintained projected record levels of world consumption next year, despite turbulent market conditions spurred by financial instability in Greece and China. In its August monthly report, the Organization of the Petroleum Exporting Countries said it was expecting world oil demand to grow by 1.38 million barrels per day – some 90,000 more than announced in its July estimates, following an increase in July. Earlier this year, OPEC slashed its prediction of non-OPEC supply for 2015, expecting lower prices to lead to a slowdown. Oil prices fell Tuesday, mirroring sentiment across commodity markets, after China devalued its currency to help boost its economic growth. Crude prices had already been falling in recent weeks owing to a global supply glut despite forecasts of demand growth. US benchmark West Texas Intermediate for September delivery fell 83 cents to $44.13 a barrel compared with Monday's close. Brent North Sea crude for September dropped 66 cents to stand at $49.75 a barrel in London afternoon deals. Prices had rebounded Monday from multi-month low points. The organization also stuck to last month's prognosis that demand growth in 2016 would reach 1.34 million barrels per day thanks to global GDP expansion set to reach 3.5 percent, up from 3.2 percent this year. “Given the better-than-expected growth in global oil demand so far this year, together with some signs of a pickup in the economies of the major consuming countries, crude oil demand in the coming months should continue to improve and, thus, gradually reduce the imbalance in oil supply-demand fundamentals,” OPEC noted in its latest report. Oil prices collapsed 60 percent between last June and January, hitting a low of $45. This was due in part to a supply glut caused by the boom in US shale oil. But OPEC, which has traditionally defended price levels by cutting output when necessary, dramatically switched strategy last November when it opted to leave its production target unchanged. OPEC has since stuck to this strategy, keeping its output target level at 30 million barrels per day. On Monday, the World Bank warned that the lifting of sanctions related to Iran's nuclear program would have a “significant impact” on the world oil market in 2016. Iran's return to the global market would eventually add about a million barrels of oil a day, lowering prices by $10 per barrel, the bank said. Oil markets have also been shaken by China's reduced economic growth and collapsing stock market. As a result of losses “triggered by China's stock market slump” and global supply glut, US crude prices posted their biggest monthly drop since the 2008 financial crisis, with Texas light sweet declining to $47.12 per barrel on July 31. “US onshore production from unconventional sources is currently expected to decline marginally in the second half of 2015 through year-end, while US offshore production is expected to grow due to project start-ups,” OPEC said. “Recent developments in the upstream as well as renewed oil price volatility have made forecasting non-OPEC supply more challenging.” The report also showed that OPEC members continue to boost supplies. According to secondary sources cited by the report, OPEC produced 30.51 million bpd in July - 1.5 million bpd more than its 30-million-bpd target. With OPEC forecasting demand for its crude will average 29.23 million bpd in 2015 - steady from last month - the report points to a 2.28-million-bpd supply surplus in the market if the group keeps pumping at July's rate. But Saudi Arabia, the driving force behind's OPEC's refusal to cut output, told OPEC it trimmed production by 200,000 bpd to 10.36 million bpd in July, down from June's record rate. OPEC still sees a sizeable slowdown in supply growth from non-OPEC next year and stuck to its view that rising demand would erode the surplus in the market. “Crude oil demand in the coming months should continue to improve and, thus, gradually reduce the imbalance in oil supply-demand fundamentals,” it said. Meanwhile, general expectations for Europe's oil demand during 2015 have improved since OPEC's last monthly report, but remain “coupled with large uncertainties” over the region's economic developments, particularly in Greece, the organization said. — Agencies
