LONDON--The Organization of the Petroleum Exporting Countries
boosted its closely watched forecast for oil demand growth for the
second month in a row Wednesday, despite continuing to warn of
possible emerging market headwinds.
In its monthly oil market report, the cartel of some of the
world's biggest oil producers upgraded its forecast for demand
growth this year by 50,000 barrels a day, after tweaking its
expectations higher by the same amount last month. The producer
group now expects oil demand to increase by 1.14 million barrels a
day this year, largely as a result of higher consumption in North
America, as well as improved demand in Europe and Africa. Total oil
demand for 2014 is pegged 91.1 million barrels a day.
However "a key determinant for this increase in world oil demand
will be the pace of growth in the emerging economies," OPEC
said.
Concerns over slowing growth in emerging markets, particularly
China, have hammered other commodities this week. Copper, often
seen as a bellwether for the health of the global economy, slumped
to its lowest level since July 2010, while iron ore prices fell to
their lowest level since October 2012 on Monday.
The selloff in many base metals was triggered by growing
concerns over the health of China's economy, following the
country's first corporate bond default in its modern history,
disappointing trade and manufacturing figures and weakness in the
country's currency.
"If this continues then there will be more stories in the
general media about the credit issues in China; what is currently
happening in base metals could therefore start to spill into
investors' exposure to oil commodities," oil consultancy
Petromatrix said in a note Wednesday.
Oil prices were under pressure in London amid expectations of
rising crude stocks in the U.S. and concerns over China. Brent
crude for April delivery on London's ICE Futures exchange was down
69 cents, or 0.6%, at $107.86 a barrel. On the New York Mercantile
Exchange, light, sweet crude futures for delivery in April were
down $1.40, or 1.4%, at $98.63 a barrel.
However, while OPEC highlighted an economic slowdown in China
and efforts to curb demand for transportation fuels in the country
posed a risk to its current outlook, it argued that China's
flourishing petrochemicals sector and expansions in refining
capacity could be seen as the main factors driving the country's
demand for oil this year.
Meanwhile, output from the group--which produces more than a
third of the oil consumed globally each day--rose to its highest
level since August last month as Iraq's production soared by
400,000 barrels a day, offsetting sharp declines from Saudi Arabia
and Libya.
OPEC said that the changes to its demand outlook would mean an
increase of 100,000 barrels a day in the demand for its oil, which
it pegs at 29.7 million a barrels a day this year. At 30.1 million
barrels a day in February, its production is comfortably above that
level.
Write to Sarah Kent at sarah.kent@wsj.com
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