Friday, March 29, 2024 | Ramadan 18, 1445 H
broken clouds
weather
OMAN
23°C / 23°C
EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Oil rises on IMF economic growth outlook

The logo of the International Monetary F
The logo of the International Monetary F
minus
plus

The International Monetary Fund (IMF) on Monday revised upward its forecast for world economic growth in 2018 and 2019, to 3.9 percent for both 2018 and 2019, a 0.2 percentage point increase from its last update in October.


The “economic outlook and seasonally colder weather has led to firmer oil demand growth, facilitating the continuation of a fall in oil inventories towards OPEC’s recent five-year average target,” BNP Paribas said in a note.


This growth, which is also translating into more oil consumption, comes at a time of supply curbs by the Organization of the Petroleum Exporting Countries (OPEC) and Russia, which began in January last year and are set to hold throughout 2018.


“The outlook for 2018 is roughly balanced for most of the year, but inventories are set to rise in Q4‘18,” the French bank said, adding that it has hiked its 2018 oil price forecasts by $10 a barrel and expects WTI to average $60 and Brent $65.


But there have also been signs of a possible price correction.


Crumbling refinery profits, first in Asia and now also in Europe and the United States, as a result of rising feedstock prices and plentifully available fuel products, point to lower crude orders going forward.


Barclays said it expected Brent to average $60 per barrel this year.


While that is $5 above its previous forecast, due to strong demand growth and falling output from OPEC-member Venezuela, the British bank said it had “a bearish view on oil prices for the quarters ahead.”


In the long-term, investors are preparing for a decline in oil demand coming from the rise of electric vehicles.


Bank of America Merrill Lynch said in a note this week it saw “peak oil demand by 2030 on electric vehicles... (and that) electric vehicles will have replaced conventional (vehicles) by 2050.”


The bank also said that “when gasoline demand peaks by 2025 (and total oil by 2030), refinery utilisation rates may decline permanently and refining margins suffer heavily.”


SHARE ARTICLE
arrow up
home icon