OPEC says slowing recovery to weigh on oil demand

LONDON Thu Sep 9, 2010 5:22pm IST

A motorist holds a fuel pump at a petrol station in London, April 18, 2006. REUTERS/Luke MacGregor/Files

A motorist holds a fuel pump at a petrol station in London, April 18, 2006.

Credit: Reuters/Luke MacGregor/Files

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LONDON (Reuters) - 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 left its forecasts unchanged for global growth in oil demand this year and in 2011 but 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 forecast for the expansion in world oil demand this year, projecting a rise of 1.62 million bpd.

The IEA, which expects consumption to expand by 1.8 million bpd in 2010, is scheduled to issue its latest forecasts on Friday.

LOWER DEMAND

Oil prices showed little initial reaction to the OPEC report. U.S. crude was up 41 cents at $75.08 a barrel as of 1049 GMT.

Demand for OPEC crude will average 28.65 million barrels per day (bpd) in 2010, the report said. That is down about 100,000 bpd from last month's forecast.

The report trimmed next year's forecast to 28.84 million bpd, also down about 100,000 bpd from last month.

The 12 OPEC members produce more than a third of the world's oil supply.

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.

(Editing by Barbara Lewis and Jane Baird)

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