Tags: oil | opec

OPEC: Slowing Recovery to Weigh On Oil Demand

Thursday, 09 Sep 2010 09:28 AM

 

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World demand for OPEC's oil will be lower than expected this year and next due to a slowing economic recovery and higher supplies from non-member countries, the group said on Thursday.

The Organization of the Petroleum Exporting Countries, in a monthly report, also said the winding-down of government measures to stimulate economies could weigh on consumption in the next few months.

"Oil demand could weaken over the remainder of this year," said the OPEC Monthly Oil Market Report, which is written by economists at the group's Vienna headquarters.

"In fact, the impact of the slowing economic recovery on oil demand is already evident as growth in oil consumption is slowing down and has even turned negative in some parts of the world."

The report underscores the cautious view on oil consumption taken by OPEC, whose demand growth estimates are lower than those of other closely watched forecasters such as the International Energy Agency (IEA), which represents consumers, and the U.S. government.

OPEC expects world oil demand to rise by 1.05 million barrels per day in 2010 to average 85.51 million bpd and to expand by the same amount in 2011, the report said. The growth forecasts were unchanged from last month.

By contrast, the U.S. government's Energy Information Administration on Wednesday raised its 2010 growth forecast to 1.62 million bpd. The IEA, which expects an expansion of 1.8 million bpd, issues its latest forecast on Friday.

"OPEC remains very cautious regarding demand," said Carsten Fritsch, analyst at Commerzbank. "I would be surprised to see any major upward revisions to demand in coming months, given the world economy is slowing down."

OPEC sees global economic growth slowing to 3.6 percent in 2011 from 3.9 percent this year. It meets on Oct. 14 in Vienna and is expected to keep existing supply policy unchanged.

 

Oil prices rose on Thursday, supported by a fall in U.S. jobless claims. U.S. crude was up 57 cents at $75.24 a barrel as of 1239 GMT.

Demand for OPEC crude will average 28.65 million barrels per day (bpd) in 2010, down about 100,000 bpd from last month's forecast. The report trimmed next year's forecast by about the same amount, to 28.84 million bpd.

OPEC said supplies from non-OPEC countries would rise by 920,000 bpd in 2010 to average 52.06 million bpd. The growth is up 130,000 bpd from last month due to higher-than-expected supply from the United States and Britain.

The group also bumped up its estimate of non-OPEC supply in 2011 to 52.42 million bpd, up 150,000 bpd from last month. Brazil, Canada, Azerbaijan, Colombia and Kazakhstan are expected to drive next year's growth.

OPEC's report suggests little need for it to pump more oil in 2011 given that production from the 12 OPEC members in August averaged 29.15 million bpd, according to figures from secondary sources cited by the report.

The group has not changed its formal output policy in almost two years after announcing a cut its production of 4.2 million bpd in December 2008 to bolster prices during the economic downturn.

It has been gradually relaxing adherence to that reduction since mid-2009. Still, Thursday's report showed that in August supply from the 11 OPEC members subject to output targets -- all except Iraq -- declined slightly.

The OPEC-11 pumped 26.8 million bpd in August, down about 40,000 bpd from July, the report said. That means OPEC completed 53 percent of the promised supply reduction, up from 52 percent in July. (Editing by Barbara Lewis and Jane Baird)

© 2014 Thomson/Reuters. All rights reserved.

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