LONDON (Dow Jones), Nov. 11, 2009
The Organization of Petroleum Exporting Countries said Wednesday it was cautious about world oil demand next year in the latest indication the cartel will probably keep its formal production target steady well into 2010.
"Although most of the signs are pointing toward higher oil demand, the downside risk factors are weighing on the  forecast," the 12-nation producer said in its monthly oil market report. The prospect of a weak economic recovery and the negative impact of higher crude prices on demand are the two main factors concerning OPEC, it said.
The group slightly raised its 2010 world crude demand forecast by 100,000 barrels a day from October and said total consumption was now seen rising about 750,000 barrels a day versus 2009 to 85.1 million barrels a day following a steep contraction in demand this year.
The outlook is still well below most other forecasters, some of whom say total crude consumption may increase 1.1 million-1.3 million barrels a day relative to 2009.
OPEC said further gains in oil prices -- up almost 80% this year at around $79 -- could, if sustained, shave about 1% or more off oil demand in industrialized nations like the U.S., the world's biggest consumer.
The biggest factor for the price rise has been the steep OPEC production cuts over the past year, although non-oil factors, such as rising stock markets, have more recently accentuated the upside.
Adding to its cautious view, OPEC said world demand for its members' crude was expected to decline by about 200,000 barrels a day in 2010, unchanged from its previous report, following an expected drop of 2.3 million barrels a day this year relative to 2008.
In its report, OPEC was quiet on the loosening compliance of its members with big output reductions the group announced last year. Although keeping plenty of crude off the market, OPEC states, led by Iran and Venezuela, are pumping a total of 1.5 million-1.7 million barrels a day above OPEC's production target of 24.845 million barrels a day.
Adherence with the group's total production cuts of 4.2 million barrels a day has dropped over the past seven months to about 62% as several OPEC states try to capitalize on higher oil prices.
Historically, the compliance level isn't bad for OPEC and has helped keep oil inventory brimming above five-year average levels in such places as the U.S.
Earlier Wednesday, Qatar's Oil Minister Abdulla bin Hamad Al Attiyah played down the prospect of OPEC changing its production target when the group reviews its output policy on Dec. 22 in Angola.
"The market is very comfortable and there's no shortage in [oil] supply at all," he told reporters in Singapore.
Copyright (c) 2009 Dow Jones & Company, Inc.
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