OPEC cuts forecast for global oil demand growth for fourth time

zoom

OPEC last week cut its forecast for global oil demand growth in 2008 for a fourth time this year and said consumption would slow in 2009, signalling a more comfortable supply and demand balance.

The Organisation of the Petroleum Exporting Countries also said the need for its oil in 2009 would show the first significant decline since 2002 due to slower demand and rising supply from non-member countries.

"Market fundamentals have clearly been softening," OPEC said in its Monthly Oil Market for July. "This trend in fundamentals is expected to continue - and even gather pace - into the coming year."

OPEC's outlook adds to evidence that record-high oil prices are slowing demand in the industrialised world and follows other forecasts that a strain on supplies may ease in 2009. Oil hit a record US$147.27 a barrel last week.

Demand will rise by 1.03 million barrels per day (bpd) this year, 70,000 bpd less than the previous forecast, the report by OPEC economists said.

The previous reductions were in June, May and February. In its first look at 2009 in the monthly report, OPEC said world consumption would rise by 900,000 bpd next year while supply from non-member countries would expand at a faster rate of 940,000 bpd.

China will make the largest contribution to world demand growth in 2009 while consumption in members of the Organisation for Economic Co-operation and Development (OECD) is expected to fall, OPEC said.

This year, a drop in demand for fuels such as gasoline in the United States due to high prices and the slowing economy is expected to weigh on consumption, despite growth in China, India and the Middle East.

OPEC, source of two in every five barrels of oil, is the latest forecaster to point to easing pressure on the world market next year.

The International Energy Agency (IEA), adviser to 27 industrialised countries on energy policy, said last week global demand would rise by 860,000 bpd in 2009, less than 890,000 bpd this year.

According to OPEC, consumers will need 31.24 million bpd of oil on average from its members next year, down 710,000 bpd from 2008. That will boost the group's reserve production capacity and could moderate prices, it said.

The exporter group blames factors such as political tension and the weakening US dollar for the surge in prices. Consumers such as the United States, by contrast, say current prices reflect a tight market.

Print | Email | Discuss this article |

USER COMMENTS (0 COMMENTS)

POST A COMMENT

CLICK HERE TO POST A COMMENT

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Security Code *
Please click post only once - your comment will not be published immediately.