OPEC on Wednesday cut its forecast for global oil demand growth in 2016, warning that concerns about emerging market, warmer weather and the removal of fuel subsidies may cased further reductions.
The Organization of the Petroleum Exporting Countries projected worldwide demand growth of 1.2 million barrels a day, 50,000 barrels per day less than the previous prediction.
OPEC also signed the possibility of further reductions of oil demand. Slowing economic in emerging markets raise concerns for oil demand. Weakness in Brazil’s economy, the removal of fuel subsidies in the Middle East and milder winter temperatures in the northern hemisphere could prompt further cutbacks, the group said.
“Current negative factors seem to outweigh positive ones and possibly imply downward revisions in oil demand growth, should existing signs persist going forward,” the organization’s Vienna-based secretariat said in its monthly market report. “Economic developments in Latin America and China are of concern.”
West Texas Intermediate Crude jumped above $41 a barrel on the news that OPEC members will have a meeting with Russia and other non-members in Doha this weekend to discuss about freezing oil production. But it is still very difficult to predict the oil price in 2016 as less oil demand may erase the effect of freezing oil production.