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OPEC Forecasts Slow Down In Oil Demand |
| The Organisation of Petrolemm Exporting Countries (OPEC) has forecast a slow down for global oil demand in 2008 for a fourth time this year and said consumption would slow in 2009, signalling a more comfortable supply and demand balance. |
The 13-member group, source of two in every five barrels of oil, also said the need for its oil in 2009 would post the first significant decline since 2002 due to slower world 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 $147.27 a barrel last week. Demand would 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 May, February and June.
In its first look at 2009 in the monthly report, OPEC said world consumption would rise by 900,000 bpd in 2009, while supply from non-member countries would expand at a faster rate of 940,000 bpd.
The need for OPEC crude would decline to average 31.24 million bpd in 2009 from 31.95 million bpd in 2008, boosting the amount of production held in reserve within the group.
OPEC has maintained that consumers have enough crude and blamed factors outside its control, such as a weak US dollar and concern over Iran's dispute with the West over Tehran's nuclear work, for rising prices.
"The decline in demand for OPEC crude, combined with increasing OPEC capacity, should further ease market conditions and likely help moderate prices," OPEC said.
"Whether the market will fully benefit from these softening fundamentals will depend on other factors such as geopolitical tensions, financial markets developments and downstream constraints," it added.
OPEC is the latest forecaster to point to easing pressure on the world market next year.
The International Energy Agency, adviser to 27 industrialised countries, said last week that global demand would rise by 860,000 bpd in 2009, less than 890,000 bpd this year.
Meanwhile, oil prices rebounded above $146 a barrel yesterday as a series of threats to supply in a skittish market kept a firm floor under prices.
"The oil market right now is fundamentally tight, that is why prices have been high and volatile," said David Moore, a commodity strategist with Commonwealth Bank of Australia in Sydney.
Light sweet crude for August delivery was up by $1.30 at $146.48 a barrel by noon in Europe in electronic trading on the New York Mercantile Exchange.
The contract rose 10 cents during Monday's floor session to close at $145.18 a barrel, just over a dime short of the all-time settlement high. It has traded as high as $147.27 a barrel, a record set last week.
August Brent crude rose from $1.44 cents to $145.36 a barrel on the ICE Futures exchange in London.
Most consumers in the major consuming countries feel the bite of pricey oil at the pump.
In a research note, analyst and trader Stephen Schork wrote that although U.S. gasoline and diesel prices decreased marginally last week they "still averaged 79.9 cents (30 per cent) above last year's pace”.
"As a result, the year to-date average is now more than 50 per cent, or $1.348 a gallon, above last year's pace," he wrote.
Threats to supply in Brazil, Iran and Nigeria have been keeping oil near the record levels hit last week.
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