OPEC says oil needs close monitoring amid robust summer demand

Oil will need to be closely watched in the coming months to ensure “a sound and sustainable market balance” during an expected surge in demand, OPEC said in its monthly oil market report.

The producers group maintained its bullish forecasts for global oil demand growth this year, predicting an annual increase of as much as 2.7 million barrels a day in the third quarter. In recent days a host of key figures in the market have said that oil consumption appears to be running hotter than expected, prompting warnings of $100 crude this summer.

“The robust oil demand outlook for the summer months warrants careful market monitoring,” the Organization of Petroleum Exporting Countries’ Vienna-based secretariat wrote in the report. Participants in its output cuts “will remain vigilant, proactive and prepared to act, when necessary, to the requirement of the market.”

The world’s biggest commodity traders are increasingly confident of a bullish oil market into the second half of the year after prices pierced $90 a barrel for the first time in months. Vitol Group Chief Executive Officer Russell Hardy said this week that his company now expects growth of 1.9 million barrels a day this year, drawing closer to OPEC’s own forecast for an annual increase of 2.2 million barrels a day. That would be close to the consumption increase seen in 2023, when demand was still bouncing back from the pandemic.

While OPEC kept most of its demand forecasts unchanged, it did revise non-OPEC+ supply growth this year lower by about 100,000 barrels a day to 1.2 million barrels a day, effectively boosting the demand for the group’s own crude.

OPEC and its allies are voluntarily cutting their production by about 2 million barrels a day, a policy that will be reviewed at their next meeting on June 1.