1 of 3 | OPEC economists left many forecast for supply and demand unchanged from previous estimates, though they noted the road ahead could be bumpy. File photo by Momamed Messara/EPA-EFE
Dec. 13 (UPI) -- Global demand for crude oil is not expected to change much by next year given the mixed outlook for the world's leading economies, OPEC economists said Tuesday.
"The global economy continued its recovery path throughout much of 2022, albeit at varying levels among regions, and with a notable slowdown towards the end of the year," economists at the Organization of the Petroleum Exporting Countries wrote in the monthly market report for December. "As the year 2022 draws to a close, the recent global economic growth slowdown with all its far-reaching implications is becoming quite evident."
OPEC nevertheless revised its world economic growth forecast up modestly to 2.8% for 2022, pointing to better-than-expected reports emerging during the third quarter. The U.S. economy, the world's largest, is expected to expand by 1.7% this year, a slight uptick from previous estimates, and grow another 0.8% next year, a level unchanged from the November report.
Year-on-year and consumer-level inflation in the U.S. economy increased by 7.1%, down from 7.7% in October and below the 9.1% peak from June. This marks the fifth month in a row for a decline in inflation and represents the smallest 12-month increase over the same period in 2021.
Growth in the European Union, where energy prices are creating substantial headwinds, for both this year and next remain unchanged at 3% and 0.3%, respectively. China, where the government is loosening pandemic-related restrictions, is on pace for a 3.1% expansion this year and growth of 4.8% next year.
Phil Flynn, an energy analyst at The Price Futures Group in Chicago, said in a report emailed to UPI that reopening in China is going to "put a further drain on tight global supply" of crude oil and other commodities, though OPEC economists left their demand expectations unchanged.
Global oil demand for 2022 is expected to average 2.5 million barrels per day, unchanged from the previous month's estimate. Oil demand next year is forecast to decline somewhat, to 2.2. million bpd. Global supply forecasts were also left unchanged for both this year and the next.
Looking ahead, OPEC sees several challenges remaining for a full global recovery. High inflation and the expected increase in interest rates from the world's leading central banks could be aggressive enough to usher in inflation, while a tight labor market, calls for higher wages and supply-chain issues all continue to create additional headwinds.
"However, a resolution of the geopolitical conflict in Eastern Europe and a relaxation of China's zero-COVID policy could provide some upside potential," economists wrote.
Crude oil prices on Tuesday were largely reacting to news of a slowdown in consumer-level inflation in the United States. The price for Brent crude oil, the global benchmark, was up about 3% as of 10:45 EST to trade at $80.17 per barrel.
