The Organization of Petroleum Exporting Countries (OPEC) released its February Oil Market Report Monday morning, and the cartel said that demand will rise by 1.17 million barrels a day in 2015, reflecting higher demand in the developed nations of the west. Lower prices are driving up demand, which OPEC says will grow by 180,000 barrels a day in the United States.
The forecast pushed crude prices higher in Monday morning trading, with West Texas Intermediate (WTI) for March delivery up about 2.5% at around $53 a barrel and Brent up about 0.7% at around $58 a barrel.
OPEC now estimates world demand in 2015 to reach 92.32 million barrels a day, up 1.17 million barrels a day over the expected total demand of 91.15 million barrels a day in 2014. The cartel’s current supply forecast calls for non-OPEC supply to total 57.09 million barrels a day in 2015, up from 56.23 million barrels a day on average in 2014.
World demand for OPEC crude is set to rise to an average of 29.21 million barrels a day in 2015, up from 29.09 million barrels a day in 2014.
The cartel does not forecast its own supply, choosing instead to cite unnamed secondary sources for estimates of demand on OPEC. For January these secondary sources put OPEC’s total crude production at 30.15 million barrels a day, nearly a million barrels a day above 2015’s projected demand on OPEC crude.
What Monday’s report highlights is that demand did rise as prices fell. What does not show up yet in the report is the impact that rising demand will have on prices and when the equilibrium point will be reached. OPEC has said it is prepared to ride out the low prices, and it looks like that may have been a good strategy.
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