World demand for OPEC’s oil will fall in 2010, the producer group said on Tuesday, citing increased supplies from non-member countries and the sluggish pace of global economic recovery.
The Organization of the Petroleum Exporting Countries said demand for its crude would average 28.11 million barrels per day (bpd) in 2010, down 380,000 bpd from 2009 and the third consecutive annual decline.
OPEC also predicted a slower recovery in global oil demand next year than forecasters such as the International Energy Agency, and said ample unused capacity at oil fields and refineries would help prevent prices rising.
“Given the projected outlook, increasing spare capacity and growing idle refining capacity should be sufficient to offset any surge in demand or supply disruption in either crude or products,” OPEC said in a monthly report.
“This reduces the likelihood of fundamental factors exerting strong upward pressure on prices in 2010.”
World oil use will rise in 2010 to 84.34 million bpd, up 500,000 bpd from 2009 driven by emerging economies, OPEC said. Growth could be as high as 800,000 bpd assuming a rapid economic recovery in the United States.
The IEA, adviser to industrialized countries, last week predicted consumption will rise next year by 1.4 million bpd. The U.S. government’s Energy Information Administration (EIA) also has higher demand forecasts.
“I think OPEC is too conservative on its demand forecast for next year. When you compare it to other public forecasts it looks pretty bearish,” said Mike Wittner, oil analyst at Societe Generale.
SIGN OF RECOVERY
Demand for OPEC crude oil is expected to shrink next year because of higher supply from producers outside the group and from non-conventional sources within it.
Supply from non-OPEC producers is expected to rise by 330,000 bpd to average 50.96 million bpd. Also, OPEC non-conventional oil and natural gas liquids are expected to add another 500,000 bpd.
OPEC took an upbeat view of the expected decline in the need for its crude next year.
“The size of the decline is much smaller than the large loss estimated for this year, indicating some sign of recovery.”
Uncertainty over how demand will recover in what is expected to be a prolonged global economic recovery led to a volatile year for oil prices.
They fell from an all-time high of more than $147 a barrel in July 2008 to a low of $32.40 in December.
By the end of June, they had recovered to a year-high of $73.38, but last week fell below $60.
To try to support the market, OPEC agreed last year to cut output by 4.2 million bpd, equal to about 5 percent of daily world demand, from its output levels in September.
Tuesday’s report said OPEC’s crude oil output, excluding Iraq, rose to 26.03 million bpd in June from 25.97 million in May, suggesting higher prices encouraged some members to relax output discipline.
The rise in OPEC output reduced its compliance with target supply cuts to 72 percent, versus 73 percent in May, according to Reuters calculations based on Tuesday’s report.
OPEC also trimmed its estimate for world oil consumption in 2009. It now expects demand to decline by 1.65 million bpd, 30,000 bpd more than its previous forecast.
Source: news.chemnet.com
