OPEC Head: Oil Demand to Weaken
International oil demand is expected to be weak in the second quarter of this year, Ali Rodriguez Araque, Secretary-General of the Organization of Petroleum Exporting Countries. Lower demand levels will put further downward pressure on prices in the second quarter, Rodriguez told a petroleum conference Monday in Auckland, New Zealand's largest city.
Rodriguez also expects to see "modest" growth in demand for oil in the second half of the year. Demand could grow by as much as 300,000 barrels a day between July and December, while OPEC's second half output may rise by as much as 700,000 barrels of oil a day, he said.
Rodriguez said OPEC's reduced output target, announced late in December, could be met in the second quarter if Russia, which isn't a member of OPEC, maintained its current output cuts. Rodriguez spoke after delivering a keynote address at the New Zealand Petroleum Industry Conference.
OPEC, at a meeting Dec. 28 in Cairo, decided to implement a production cut of 3.5 million barrels of oil a day. "OPEC's action, supported by other producers, has been instrumental in halting the oil price slide and stabilizing the market, nevertheless we don't think the oil industry is off the hook yet," Rodriguez said. "Demand is expected to be weak in the next few months, putting further (downward) pressure on prices, particularly in the second quarter," he added. Rodriguez said that OPEC's reference price for crude oil had averaged more than $19 a barrel so far this year. During November and December the lowest price for the OPEC reference was $15.85 a barrel.