The Organisation of Petroleum Exporting Countries (OPEC) has revised its oil market forecast for the month on Wednesday, foreseeing an increase in oil demand of 30,000 barrels per day (bpd) to 1.22 million bpd.
However, the Organisation mentions “lingering concerns that US and European refiners could slash runs” in an attempt to decrease the demand for crude oil.
“Oil prices have been through a turbulent period since UK voters opted to leave the EU. (…) This was then followed by a rebound that took prices almost all the way back to the starting point, only to fall again,” OPEC’s Monthly Oil Market Report (MOMR) reads.
Oil Demand Continues to Grow and Hurt Prices
According to the monthly report, the Organisation expects global oil demand to grow by 1.15 million bpd, while total oil consumption is expected to hit a new record of 95.41 million bpd in 2017.
However, OPEC notes, concerns that refiners could cut processing, has been placing further pressure on crude prices over the past few weeks.
OPEC Headquarters in Vienna, Austria
Later this year, OPEC expects the oil market to gain further balance, with demand for OPEC crude expected to remain unchanged in 2017.
In terms of supply, OPEC data show that global oil supply has increased in July, giving rise to an increase in global oil output.
Oil Supply and Demand Takes a Toll on Crude Prices
These changes on oil demand and supply have had a severe impact on crude oil prices, with the price of the OPEC Reference Basket suffering a 6.9% slump in July, after a significant recovery.
This is mainly attributed to demand levels lower than expected, high refined product stocks and a rising supply of crude.
UK voters’ decision to leave the EU has also led to a turbulent period for oil prices. Overall, Brent crude has fallen from above $115 in June 2014 to a current rate of approximately $45.
But mainly, high stockpiles of refined oil products and crude could mean that a potential recovery is ever more distant, unless the market sees a significant cut in production or rising demand.