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Wed 9 Jun 2010 02:48 PM

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OPEC cuts oil demand forecast, ups non-OPEC supply

The oil market has 'no room' for more crude supplies, OPEC says in its report.

OPEC cuts oil demand forecast, ups non-OPEC supply
(Getty Images)

The oil market has "no room" for more crude supplies, OPEC said on Wednesday as it trimmed its forecast for world oil demand growth in 2010 and hiked its prediction for supplies from outside the group.

The monthly report from the Organisation of the Petroleum Exporting Countries, which pumps more than one in every three barrels of oil, said world oil demand would rise by 940,000 barrels per day (bpd) in 2010, 10,000 bpd lower than previously forecast.

At the same time, the group said crude oil production from countries not in OPEC would jump by 640,000 bpd this year, raising its estimate from a previous forecast of a 530,000 bpd rise.

"Demand for OPEC crude in 2010 is projected to average 28.8 million bpd, following a downward revision of 70,000 bpd from the previous assessment," OPEC said in the report. "This would leave no room for additional crude supplies in the market."

Total world demand is seen averaging 85.4 million bpd in 2010, the group said in the report, but demand for its crude would decline by 175,000 bpd from last year.

OPEC said that while recent data indicated demand growth had been slightly higher than estimated during the first half of this year, demand in the second half of the year could be impacted by slower-than-expected economic growth.

On Tuesday, the U.S. Energy Information Administration cut its own oil demand growth forecast for this year due to the euro zone debt crisis.

Despite this, OPEC members' production has been creeping higher.

While members with output quotas, all except Iraq, met 53 percent of the targeted 4.2 million bpd cuts in May for the second month running, according to Reuters calculations based on the latest OPEC data, OPEC production was up from April.

Total OPEC supply including Iraq rose by 140,000 bpd in May to average 29.26 million bpd, the report said, citing secondary sources.

At current OPEC production levels, the oil market will have a surplus of 460,000 bpd this year, if the group's estimates prove to be correct. (Reuters)