OPEC sees robust oil demand growth even if prices rise

Mon Dec 5, 2016 9:01am EST
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By Promit Mukherjee and Sudarshan Varadhan

NEW DELHI (Reuters) - The Organization of the Petroleum Exporting Countries expects oil demand in 2017 to be as robust as this year, the group's secretary general told an energy conference on Monday, though recently agreed production cuts could raise prices for buyers.

Mohammed Sanusi Barkindo, briefing reporters on the sidelines of India's Petrotech energy conference, said Asia would have a big role to play in the demand growth and that there was plenty of room for OPEC and non-OPEC countries to grow in the global oil market.

OPEC last week agreed its first oil output cuts since 2008, looking to reduce production by around 1.2 million barrels per day (bpd) beginning in January to try to reduce global oversupply and prop up prices. It hopes non-OPEC countries will contribute another 600,000 bpd to the cut.

Barkindo said OPEC has invited non-OPEC countries Russia, Colombia, Congo, Egypt, Kazakhstan, Mexico, Oman, Trinidad and Tobago, Turkmenistan, Uzbekistan, Bolivia, Azerbaijan, Bahrain and Brunei to a meeting on Dec. 10 to discuss their contribution.

"We want the inventory level to be at a past 5 year average, not more and not less than that," he said.

Oil prices have risen since the production agreement, with benchmark Brent crude oil futures soaring on Monday to its highest since July 6, 2015 to $55.20 a barrel. [O/R]

This has worried big buyers like India, which imports more than 80 percent of its crude oil and has benefited from two years of soft prices. Indian Oil Minister Dharmendra Pradhan told the conference oil producing countries "must match security of supply with security of demand" when deciding prices.

"We are expecting growth next year as robust as this year, in the region of around 1.2 million bpd," Barkindo said. "May be it can go higher, you never know. If it goes higher then producer countries have a right to produce higher in order to meet the demand from countries like India."   Continued...

A soldier patrols in front of the headquarters of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna, Austria, November 29, 2016. REUTERS/Heinz-Peter Bader