LONDON - Global demand for OPEC's crude will rise in the next two years more slowly than expected, the group forecast, as a recovery in prices resulting from an OPEC-led supply cut stimulates renewed output growth from non-members.
The Organization of the Petroleum Exporting Countries also said in its 2017 World Oil Outlook that rapid adoption of electric vehicles could cause oil demand to plateau in the second half of the 2030s, denting OPEC's longer-term prospects.
OPEC and rivals including Russia have been cutting output in 2017 to get rid of a glut. A resulting price rise is spurring a rebound in non-OPEC supply, the report shows, but OPEC still expects its market share to increase further down the line.
"It is evident that this major commitment to production adjustments has been central to the rebalancing process that the market has undergone this year," OPEC Secretary-General Mohammad Barkindo wrote in a foreword to the report.
"The long-term focus for additional liquids demand remains on OPEC."
Demand for OPEC crude will reach 33.10 million barrels per day (bpd) in 2019, the report said. While up from 32.70 million bpd in 2016, the 2019 figure is down from 33.70 million bpd forecast in last year's report.
OPEC raised its forecast for the supply of tight oil, which includes U.S. shale. It said a rise in prices in 2017, plus sustained demand growth, had resulted in a higher forecast for supplies outside OPEC.
"The medium-term outlook for non-OPEC liquids growth has changed quite considerably," OPEC said in the report, referring to its 2016 forecasts. "Most strikingly, U.S. tight oil production has exceeded previous growth expectations."
Oil prices hit their highest since July 2015 on Monday, trading above $62 a barrel.
This year's report did not mention the oil price it assumes. Last year's report assumed OPEC's basket of crude oils would reach $65 per barrel in 2021.
HIGHER FORECAST FOR TIGHT CRUDE
Global output of tight oil will reach 7.0 million bpd by 2020 and 9.22 million bpd in 2030, the report said, as Argentina and Russia join North America as producers.
Last year's estimates were 4.55 million bpd by 2020 and 6.73 million bpd by 2030.
Years of high prices - supported by OPEC output restraint – helped boost non-OPEC supply and make non-conventional oil, such as shale, viable. This exacerbated a glut, leading to the 2014 price collapse that the OPEC-led cut was designed to tackle.
OPEC also increased its medium-term world oil demand forecast, expecting oil use to reach 102.3 million bpd by 2022 - 2.24 million bpd more than in last year's report.
Demand is seen at 111.1 million bpd in 2040, up from 109.4 million bpd expected last year, with OPEC's share of the world oil market expected to rise to 46 percent from 40 percent in 2016.
Still, OPEC, which normally forecasts ever-increasing oil demand, said more widespread use of electric vehicles (EVs) than assumed in the report's main scenario could trim this figure.
"In just a few years, EVs have gone from being completely unaffordable, impractical and not particularly nice, to representing a valid option for a niche pool of customers," OPEC said.
The 2040 oil demand forecast could be curbed to 108.60 million bpd if electric vehicles are adopted more widely than assumed in the report's reference case.
"Moreover, global oil demand is estimated to plateau around this level in the second half of the 2030s," OPEC said.