OPEC Predicts Rise In Oil Demand
20th DEC 2006
The Organisation of Petroleum Exporting Countries, the producer of 40 per cent of the world’s oil, said it expects global demand to rise 1.6 per cent in 2007, up from this year’s “modest” gain of 1.2 per cent.
The United States, China and the Middle East will lead the gain in world demand to 85.6m barrels a day in 2007, from 84.3m barrels a day this year, the Organisation of Petroleum Exporting Countries’ Vienna-based secretariat said on Monday. Both estimates were unchanged from the previous monthly report.
“Risks for oil demand appear to be more weighed on the downside, given the dangers to global economic growth emanating from a visibly weakening US economy, where some forecasts show a non-negligible risk of downright recession,’’ OPEC said.
“The recently weakening US dollar may be an early reflection of diminished confidence in US economic prospects.’’
OPEC last week agreed on a second round of production cutbacks, expanding on earlier reductions to bolster prices and to compensate for rising non-OPEC supply and the seasonal decline in heating fuel consumption that occurs after the Northern Hemisphere’s winter. The decision has helped keep New York-traded crude oil futures above $60 a barrel.
OPEC’s 11 members pumped 28.85m barrels of crude a day in November, down 593,100 barrels a day from October amid decreases from all members except Indonesia, OPEC said in the monthly report, citing its survey of “secondary sources,” which includes estimates from news agencies and independent analysts.
Excluding Iraq, which is exempt from output restraints, OPEC’s other 10 members pumped 26.86m barrels a day last month, down 552,300 barrels a day from October. Saudi Arabia, Venezuela and the United Arab Emirates had the biggest monthly reductions, of 167,900 barrels, 84,500 barrels and 75,700 barrels per day, respectively.
At its meeting in Abuja, Nigeria, last week, OPEC agreed to a 500,000 barrel-a-day supply cut starting February 1. The reduction will come on top of a 1.2m barrel-a-day cut that started November 1, after a decision at an Oct. 20 meeting in Doha, Qatar.
“The decision taken in Doha at a time of sharply declining prices is widely recognized to have satisfactorily reduced the imbalance in the market and, as a result, halted the destabilizing downward trend’’ in prices, OPEC said on Monday.
The second supply cut “has been scheduled to come into effect after the winter season, ensuring sufficient crude supplies during this strong demand period while addressing looming market imbalances in 2007,’’ the report added.
OPEC expects demand for crude oil from its 11 members will average 28.3m barrels a day next year, which is 600,000 barrels a day less than the estimate for this year. Conversely, the group expects non-OPEC nations to supply 57.3m barrels a day of oil next year, which is 2m barrels a day more than in 2006.
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