OPEC strategy of increasing pumping glut of oil on the market starts to bear fruit, as Blackrock CEO says oil prices are likely to remain between $60 and $80 per barrel for forseeable future
Demand for oil will strengthen this year, according to OPEC, as the cartel said its strategy of pumping oil into the market to squeeze out US producers was taking effect.
The Organisation of the Petroleum Exporting Countries, which pumps a third of the world's oil, believes demand will average 29.27m barrels per day (bpd) in 2015, representing an increase of 80,000 bpd from its previous prediction.
"Higher global refinery runs, driven by increased seasonal demand, along with the improvement in refinery margins, are likely to increase demand for crude oil over the coming months. Given expectations for lower US crude oil production in the second half of the year, these higher refinery needs will be partially met by crude oil stocks, reducing the current overhang in inventories," OPEC said.
The body believes non-OPEC supply will rise by only 680,000 bpd this year, down from its previous forecast of 850,000 bpd. This reflects lower expected output from the United States and other non-member countries.
"US tight oil and Canadian oil sands output are expected to see lower growth following the recent strong declines in rig counts," OPEC said.
The monthly report also confirmed industry estimates of a surge in OPEC production in March, led by higher output in Saudi Arabia and Iraq and a partial recovery in Libyan production.
Brent oil prices have recovered from their January low of $50 a barrel, and are currently trading at $62.50 on Thursday.
Laurence Fink, the CEO of BlackRock, the world's biggest asset manager, said on Thursday that the long-term price of oil would be between $60 and $80.
He told CNBC that excess supply would continue for the forseeable future.
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