Growing industrialization may trigger Africa’s oil demand this year
…OPEC predicts 3.89mbpd consumption level
THE expected growth in the economies of the African nations would drastically shoot up oil demand by about 2.47 per cent to 3.89 million barrels per day (mbpd), according to the Organisation of Petroleum Exporting Countries (OPEC).
The cartel, in its latest edition of its Monthly Oil Market Report, speculated that the continent would experience tremendous growth in oil demand within the first and fourth quarters of 2015.
Besides, the report estimated that OPEC’s January crude production decreased by 53,000 bpd to average 30.15 mbpd.
In 2015, it expected that non-OPEC oil supply would grow by 0.85mbpd, down 0.42mbpd from the previous assessment. OPEC natural gas liquids (NGLs) are forecast to grow by 0.20mbpd to 6.03mbpd in the year.
African oil demand is seen having some upside potential of about 3.02 per cent growth rate from 3.74 mbpd in 2014 to 3.84mbpd in first quarter 2015, and 3.89 in fourth quarter.
According to the report, demand for OPEC crude is projected at 29.2mbpd for 2015, representing an increase of 0.1mbpd over the previous year’s level. The first and second quarter of 2015 are expected to decline by 0.9mbpd and 0.2mbpd, respectively, compared to the same period last year.
In contrast, the third and fourth quarter are projected to increase by 0.4 mbpd and 1.0mbpd, respectively, over the same period a year earlier.
Global oil demand growth in 2014 is expected to be around 0.96mbpd, broadly unchanged from last month’s report. In 2015, world oil demand is projected to rise by 1.17mbpd slightly higher than in the previous report, mainly to reflect expectations of an uptick in oil requirements in OECD Americas.
The cartel however emphasizes that developments in the global scene needed to be monitored closely, particularly following the sharp drop in crude oil prices seen in recent months.
“As prices drop, oil requirements are likely to respond positively, although this can be impacted by other factors. For example, in 2008, prices fell sharply starting in the summer with the onset of the financial crisis and the global economic recession, which also led to a deterioration in demand.
“This time the sharp fall in prices has been mainly driven by excess supply. As a result, lower prices are likely to help to accelerate the pace of oil demand growth this time.
“Other factors can also impact the degree to which any acceleration in demand takes place. In addition to economic growth, the adoption of energy policies and regulations can also influence oil requirements greatly. These factors tend to vary considerably from one economy to another and, as a result, their impact will also differ,” it stated.
Meanwhile, oil prices continued to rise and have now breached $53 after OPEC released its report on the market.
The 98-page document studies the oil price movement, state of the world economy, current and projected demand for oil and the supply of the commodity in the international market.
According to the report, the U.S. region is expected to post positive figures in terms of oil demand. The report remains cautious when it comes to Europe and Asia. The demand for oil in Japan is expected to be lacklustre because of the “slow economic growth” in the country. Demand in China and India are expected to grow because of the low oil prices that are currently prevailing.