Global demand for oil remains strong: Goldman Sachs

[BENGALURU] Goldman Sachs said data from the May-June period suggests that global demand for oil remains strong, driven by robust economic growth.

"Data in the United States, Japan, India, China, Korea, Brazil, Mexico, Spain, and France, accounting for 52 per cent of global demand and with an 80 per cent correlation to its growth, implies June global demand growth of 1.54 million barrels per day (bpd) year-on-year," the bank said in a note on Sunday.

Data for the May-June period suggests that demand for oil grew by 1.81 million bpd in the second quarter of 2017, above its previous quarterly growth forecast of 1.55 million bpd, despite a year-on-year rise in prices, the bank said.

Goldman Sachs forecast demand growth of 1.60 million barrels per day in the second half of the year. It sees 2017 Brent prices at US$52 per barrel and expects 3.7 per cent global real GDP growth.

"With recent activity and oil demand levels surprising us to the upside, we view the risks to our above consensus 1.63 million bpd annual demand growth forecast as skewed to the upside," Goldman analysts said.

Oil prices slipped on Monday but still held near nine-week highs, supported by robust US jobs data last week and a slight fall in the US drilling rig count, even as rising output from OPEC reined in crude markets.

"We nonetheless expect a gradual deceleration of demand growth in the rest of the year, driven by our economists'sequentially slowing growth forecast as well as low 3Q16 but very strong 4Q16 oil demand growth base effects."

REUTERS