OPEC: US Economic Uncertainty Weighs on Oil Demand
LONDON (Dow Jones), Feb. 10, 2010
Uncertainty about the pace of economic recovery in the U.S. is putting oil-demand growth under pressure in the world's largest crude consumer and is weighing on global consumption, the Organization of Petroleum Exporting Countries said Wednesday in its monthly report.
The warning, adding to OPEC's concerns about European countries such as Greece, suggests the group is likely to stick to its existing production quotas when it meets March 17 in Vienna.
"The 1% forecast growth in U.S. oil demand this year is facing a set of obstacles that could prevent it from materializing," the report said.
"If this happens, then the U.S. oil demand might come flat if not negative for the total year," OPEC added.
The U.S., which uses close to a quarter of the crude oil consumed worldwide each day, "is a key country to world oil-demand changes," the report said.
The organization also warned of "heightened fiscal uncertainties in the euro zone," with "the mounting public debt of some of its member countries, particularly Greece."
Greece's budget deficit and debt load have put its sovereign bonds at risk of default, triggering credit-market jitters worldwide. Fellow European Union partners are now considering a bailout.
In the major industrialized countries, "the recovery is far from self-sustaining and remains largely dependent on continued government support," OPEC said.
The organization, which has come under pressure in the past to increase production, may have a vested interest to paint a bleaker picture than consumer nations.
But its concerns follow last week's data from the U.S. Department of Energy that unexpectedly showed a weekly buildup in crude inventories as refineries continue to struggle with not enough demand.
Despite its concerns, OPEC said Wednesday it was keeping its world oil-demand forecast unchanged for 2010, hoping that rising Chinese consumption will make up for any weakness in Western economies.
Global demand is still expected to average 85.1 million barrels a day this year, growing by 0.81 million barrels a day from last year. That would suggest a downgrade in demand growth of 10,000 barrels a day. In its previous report, OPEC estimated demand growth at 0.82 million barrels a day.
But the expected rise in global consumption comes as OPEC members may already be outpacing demand growth.
While OPEC sees demand for its own oil at 28.8 million barrels a day on average this year, the group's production rose to 29.2 million barrels a day in January, up 63,200 barrels a day.
The statistics, based on secondary sources, show compliance with production cuts agreed in 2008 has now fallen to 53.5% from 80% in March last year.
Higher production in Angola and Venezuela more than offset a drop in Nigeria's output, which fell by 124,000 barrels a day in January.
There, militants in the Niger Delta restarted attacks on oil installations last month, shutting down some production for Royal Dutch Shell PLC (RDSB.LN) and Chevron Corp. (CVX).
Copyright (c) 2010 Dow Jones & Company, Inc.
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