OPEC says demand for oil should grow

The Organization of Petroleum Exporting Countries, or OPEC, cited economic risks to summer oil demand, but maintained its forecast for global oil demand growth in its monthly report released on Thursday.

The report offers a fresh viewpoint on the world oil market after the group and its allies announced a surprise output cut earlier this month.

OPEC said demand could take a hit from any economic weakness due to interest rate hikes, Reuters reported.

"It should be noted that potential challenges to global economic development include high inflation, monetary tightening, stability of financial markets, and high sovereign, corporate and private debt levels," OPEC said. "OECD commercial inventories have been building in recent months, and product balances are less tight than seen at the same time a year ago."

It said demand will rise by 2.32 million barrels per day, or 2.3 percent, which is unchanged from last month's forecast.

Output cuts

Earlier this month, Saudi Arabia and other OPEC+ oil producers announced oil output cuts of around 1.16 million barrels per day, in a move that analysts said would cause an immediate surge in prices and that the United States called "inadvisable".

The move brought the total volume of cuts by OPEC+, which groups OPEC nations with Russia and other allies, to 3.66 million barrels per day, or 3.7 percent of global demand, Reuters reported.

Oil prices had fallen in March toward $70 a barrel, the lowest in 15 months, due to concern that a global banking crisis would hit demand, analysts said. Further output cuts had not been expected after crude recovered toward $80.

On Wednesday, Fatih Birol, head of the International Energy Agency, described the cutbacks as a "bad surprise", Bloomberg reported.

Crude oil prices rose by 2 percent on Wednesday to $87, the highest in more than a month. Industry news websites reported oil prices were stable on Thursday as the market measured the possibility of limited supply against possible recession in the US, the world's largest oil consumer. High energy prices have been a major driver of inflation.

The IEA has indicated the output cuts would tighten supply in the second half of the year and push oil prices higher still.