OPEC Raises Oil Demand Forecast Amid Global Growth Uncertainty

"With China's robust economy anticipated to drive oil demand this year, oil prices could remain supported in the near term", he said.

USA crude prices are at the steep discount to Brent as a more than 25 percent rise in US crude production to 10.7 million barrels per day has left the American market well supplied.

The surge in oil prices comes at a time of tight supply amid record Asian demand and voluntary output restraint by the Organisation of the Petroleum Exporting Countries and non-OPEC producers, including Russian Federation.

OPEC slightly raised its estimate of growth in world demand this year to 1.65 million bpd. OPEC also boosted its forecast for demand this year whiling trimming its outlook for global oil production.

OPEC expects non-OPEC supply to expand by 1.72 million bpd this year, which is higher than the growth in global demand.

Still, OPEC also said its total crude output rose by 12,000 barrels a day in April, month-on-month, to average 31.9 million barrels a day.

The chief executive of Sun Global Investment Mihir Kapadia said: "Oil markets have been cautious as the current impact of the USA sanctions on Iran remain unclear, with European and Asian allies continuing to resist Trump's call to pull out of the JCPOA".

OPEC figures published on Monday showed that oil inventories in OECD industrialised nations in March fell to 9 million barrels above the five-year average, down from 340 million barrels above the average in January 2017.

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This decline is largely due to an Opec-led supply cut deal put in place since the beginning of previous year to help stabilize prices, coupled with growing demand in Asia.

"The Iran sanctions are likely to fuel speculation of tighter global supply, while heightened geopolitical tensions in the Middle East may fan fears of potential supply disruptions", he said. The gap between global and USA oil prices widened as new figures showed that producers in the US are ramping up quickly.

"Although oil could venture higher in the near term, robust production from United States shale remains a threat to higher oil prices", he said.

Capital Economics analysts said OPEC is well-positioned to offset any fall in output from Iran caused by the re-imposition of sanctions on the country.

Before the Iran nuclear deal, the U.S. sanctioned Iran's oil production in 2012 which reduced the output from 2.5m barrels per day to just over 1m. "However, after a period of a considerable growth, uncertainties seem to be on the rise", said the report.

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The increase was mainly the result of higher crude production in Saudi Arabia - the world's largest crude exporter and the de facto head of OPEC - and Algeria, the report said.

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