In the face of declining demand for crude oil globally, the Organisation of Petroleum Exporting Countries (OPEC) is taking solace in the fact that soaring gas prices could mitigate impact of global demand for oil products as end users switch.
Further more the Organization has trimmed down its world oil demand growth forecast for 2021 while maintaining its 2022 view, its monthly report showed on Wednesday.
The OPEC, now expects oil demand to grow by 5.82 million barrels per day, down from 5.96 million bpd in its previous forecast, saying that the downward revision was mainly driven by data for the first three quarters of the year.
It maintained a growth forecast of 4.2 million bpd for next year.
The group of oil-producing countries said, however, that natural gas prices at record highs could provide a potential headwind to oil demand growth as industrial users switch to oil products instead.
“Should this trend continue, fuels such as fuel oil, diesel, and naphtha could see support, driven by higher demand for power generation, refining and petrochemical use,” OPEC said.
European gas at the Dutch TTF hub on Wednesday stood at a crude oil equivalent of about $177 a barrel, based on the relative value of the same amount of energy from each source, Reuters calculations based on Eikon data showed – higher than the record high Brent crude price of $147 in 2008.
Saudi Aramco CEO Amin Nasser last week put the demand boost from the gas-to-oil switch at about 500,000 bpd.