LONDON (Dow Jones Newswires), Aug. 9, 2011
OPEC Tuesday trimmed its global oil demand growth forecast for 2011 and warned it could cut the outlook further, signaling that mounting economic woes are biting into the world's crude consumption.
In its monthly report, the Organization of Petroleum Exporting Countries reduced the global demand growth forecast for this year by 150,000 barrels of oil a day--the deepest such cut this year--on a downgrade in its U.S. economic growth outlook and weakening Chinese prospects.
"Dark clouds over the economy are already impacting the market's direction," OPEC said. "The potential for consequent deterioration in market stability requires higher vigilance and close monitoring of developments over the coming months."
Global oil demand will still rise by 1.2 million barrels a day, and the downgrade represents only a fraction of the 88.14 million barrels a day OPEC expects to be consumed this year worldwide.
OPEC warned that were higher oil prices to persist or the most industrialized economies to suffer further setbacks, it might trim the forecast by another 200,000 barrels a day. OPEC produces more than one in three barrels consumed worldwide each day.
Coming hard on the heels of a drop in oil prices by over 10% since early August, the downgrade could give ammunition to an Iran-led group that has fought higher oil output. A June OPEC meeting in Vienna ended in acrimony after a Saudi Arabia-led group failed to persuade OPEC that an anticipated surge in oil demand this year merited an output increase.
OPEC Tuesday cut its U.S. economic growth forecast to 1.8% in 2011 from 2.5% previously. U.S. oil consumption data for May showed the largest decline observed since January 2010 and demand contraction in industrialized countries was expected to continue.
OPEC also said demand in China--the engine of oil consumption growth in recent years-has been losing steam. The country's factory sector grew in June at its slowest pace in 28 months, OPEC said.
OPEC estimated demand for its own crude remained unchanged for 2011 and is still up 200,000 barrels compared to last year, as the global demand downgrade is offset by lower-than-expected non-OPEC supply. The OPEC oil demand outlook, however, was cut by 100,000 barrels a day for next year.
But the group's data also still points to a supply gap of 811,000 barrels a day in the second half of this year, according to a Dow Jones calculation of the difference between current oil output and OPEC's demand forecast for the coming period.
But the crystal ball will roll into the consumers' camp with the U.S. Energy Information Administration expected to release its own report later Tuesday, followed by the International Energy Agency Wednesday.
Copyright (c) 2011 Dow Jones & Company, Inc.
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