OPEC: Oil Demand Growth Slowing, High Price Effect Spreading
LONDON (Dow Jones Newswires), June 13, 2008
The Organization of Petroleum Exporting Countries Friday revised down its forecast for world oil demand growth this year, saying high oil prices are beginning to affect consumption in industrialized economies beyond the U.S.
However, demand in emerging economies will offset that slowing consumption, it said, with overall global economic growth forecast to remain unchanged. In addition, China alone is expected to be responsible for 40% of the world's total oil demand growth this year, OPEC said in its latest monthly oil market report.
"The slowing U.S. economy and the current price environment will affect oil demand not only in the U.S. but also across the OECD (Organization for Economic Cooperation and Development) in the second half of this year," the report said.
World oil demand is forecast to grow 1.28%, or 1.1 million barrels a day, to average 86.9 million barrels a day this year. That was down from the previous month's forecast of 1.35% growth.
Data from the January-March period shows demand in the OECD countries, representing the 27 most-advanced economies, was down 700,000 barrels a day from the first quarter of 2007, it said.
Governments in many developing nations subsidize the cost of fuel for consumers, which has underpinned surging consumption. The increasingly high cost of those subsidies amid the surge in crude oil prices has forced some governments to roll them back, but that isn't expected to affect overall demand significantly, OPEC said.
"Booming Asian economies are capable of absorbing the extra fuel cost in the short run," and it is "anticipated that 40% of the total world oil demand growth this year will be attributed to China alone," the report said.
OPEC revised down its forecast for supply growth in non-OPEC producing countries this year by 50,000 barrels a day compared with last month's forecast, citing lower expectations in the U.K., Australia, Sudan and Kazakhstan. Non-OPEC supplies are now expected to grow 700,000 barrels a day to 50.1 million barrels a day, the report said.
Daily output from the 13-member producer group rose in May by 343,200 barrels a day from the previous month to 32.19 million barrels a day, with Saudi Arabia and Iraq increasing output significantly, the report said.
The report also noted that for the second month running, Angola topped Nigeria as Africa's biggest oil producer in May, underscoring both Angola's success the past two years in boosting its oil pumping capacity and Nigeria's ongoing production woes amid regular militant attacks on oil infrastructure.
Nigeria's oil output capacity is around 2.8 million-3.0 million barrels a day, but it pumped just 1.89 million barrels a day last month, OPEC said in its monthly oil market report for June. Angola produced 1.90 million barrels a day in May, under its total capacity of around 2 million barrels a day, OPEC data said.
OPEC said its estimate for how much crude would be needed from its 13 members in order to balance the market in 2008 was 200,000 barrels a day less than in 2007. It now forecasts the so-called "call-on-OPEC" in 2008 to average 31.8 million barrels a day compared with 32 million barrels a day last year.
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