With global economic growth in 2014 projected to increase to 3.5 per cent from 2.9 per cent in 2013, world oil demand is forecast to rise by one million barrels per day, according to the latest monthly bulletin of the Organisation of Petroleum Exporting Countries (OPEC).
World oil demand is expected to grow by one million barrels a day (b/d) in 2014 compared with 900,000 b/d last year, supported by improved performances by the emerging economies and as the global economy continues to recover in general, it said.
"Oil demand growth continues to come mainly from non-OECD (Organisation for Economic Cooperation and Development) countries, while OECD oil demand is expected to show a further contraction, albeit at a slower rate," OPEC's Monthly Oil Market Report (MOMR) observed.
However, an MOMR article pointed out that the latest forecast is associated with uncertainties related to the pace of economic growth in the OECD region, China and India, as well as to policy reforms in oil product retail prices in some emerging economies.
The improving picture is backed by a strengthening of the global economy in 2014, which is slated to expand by 3.5 percent against 2.9 percent in 2013, mainly as a result of momentum in the OECD economies.
"However, many challenges remain, ranging from the outcome of postponed fiscal negotiations in the United States, the future monetary policy of major central banks, the resilience of the Euro-zone recovery, and continued reforms in the emerging economies to improve structural issues," the report commented.
It stressed that the signs of a recovery are already visible in rising global industrial production.
According to the MOMR, on the oil supply side, non-OPEC supply growth in 2014 is expected at almost the same level as last year at 1.2 million b/d with some risks in both directions, given possible early start-ups or delays, as well as political, technical and meteorological factors.
Output of OPEC natural gas liquids (NGLs) is expected to rise by 100,000 b/d in 2014, following an increase of 200,000 b/d last year.
The report noted that non-OPEC supply growth in 2013 has performed better than initially expected, supported mainly by the US and Canada, which added around 1 million b/d.
Other contributions to 2013 growth have come from the Sudans, Russia and China, while output disruptions in Syria, along with the decline in North Sea production, partially offset the growth.
"While the above forecasts indicate that incremental non-OPEC oil supply and OPEC NGL growth will outpace projected world oil demand growth, the 164th OPEC Ministerial Conference (held in Vienna Dec 4) decided to maintain current production of 30 million b/d in the interest of maintaining market equilibrium.
"In taking this decision, the Organization's Member Countries re-confirmed their readiness to promptly respond to unforeseen developments that could have an adverse impact on an orderly and balanced oil market," the report said.
Looking at 2013, the MOMR said the price of the OPEC Reference Basket experienced significant quarterly swings.
After reaching close to USD 115 per barrel in the first quarter, the basket price came down steeply to around USD 96 per barrel in the second quarter, before regaining strength to rebound sharply in the third quarter.