Low Oil Prices Hits Global Economy, OPEC Says
February 10 2016 - 07:10AM
Dow Jones News
The lowest crude-oil prices in a decade are starting to hurt the
global economy and aren't increasing consumer demand for gasoline
and other petroleum products as much as expected, OPEC said
Wednesday.
The Organization of the Petroleum Exporting Countries cut its
forecasts for global oil-demand growth and the world economy,
saying lower oil prices were offset by lower consumer appetite
while hurting large countries, such as Russia and Brazil.
The announcement, in OPEC's closely watched monthly oil report,
comes after oil prices resumed their decline after members of the
oil-producer group failed to agree on a production cut over the
week.
Lower oil prices are generally considered a boon to oil
consumers and more broadly for the global economy. But this time
around, "the overall negative effect from the sharp decline in oil
prices since mid-2014 has outweighed benefits in the short term,"
OPEC said.
The organization, which supplies more than one in three barrels
of oil consumed globally, lowered its 2016 global growth forecast
to 3.2% from 3.4%.
Despite oil prices reaching levels not seen in more than 10
years last month, OPEC also cut its oil-demand growth forecast by
10,000 barrels a day for this year.
Oil demand is now forecast to rise 1.25 million barrels a day to
94.21 million barrels a day this year, OPEC said, citing consumers
cutting back on car transport and the lingering impact of the
recent financial crisis.
"Due to the aftereffects from the 'great recession', the
potential that consumer spending ability could rise is limited," it
said.
Despite lackluster appetite for its commodity, OPEC has
continued to pump at full tilt. The group said its production rose
131,000 barrels a day to 32.33 million barrels a day in January,
driven by higher output from Nigeria, Iraq, Saudi Arabia and
Iran.
The group's output level last month implies a global oil surplus
of 1.84 million barrels a day in the first quarter of 2016, based
on the report's data.
Write to Benoî t Faucon at benoit.faucon@wsj.com
(END) Dow Jones Newswires
February 10, 2016 06:55 ET (11:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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