Opec trims demand outlook on external supplies

The Organization of Petroleum Exporting Countries (Opec) trimmed its demand forecast for its members’ crude for this year as production from outside the group grew the most since 2002.

Opec, responsible for about 40 per cent of global supplies, predicted in a monthly report today that the world will need 28.6 million barrels of oil a day from its 12 members this year. That’s about 100,000 barrels a day less than last month’s revised figure. The group is gathering in Vienna, its headquarters, for an October 14 meeting.

“The world economy continues to expand at below-average levels,” Opec’s Vienna-based secretariat said in the report. Economic growth is slowing in the US “amidst a still very challenging level of unemployment.” The US is the world’s largest oil consumer.

 

Opec has reduced its forecast for demand for its members’ crude from as much as 28.8 million barrels a day in May as supplies from producers including Russia, China and Brazil rise. Non-Opec oil supply will average 52.23 million barrels a day this year, an increase of 1.01 million barrels on last year, according to the report.

Less Opec crude will also be needed as the supply of natural gas liquids rises, the report said. Demand for Opec crude for 2011 is forecast at 28.8 million barrels a day, unchanged from last month’s forecast.

Global oil demand has been rising since the third quarter of 2009 led by developing economies outside the Organization for Economic Cooperation and Development including China and Brazil, according to the Paris-based International Energy Agency.

Global oil demand will average 85.59 million barrels a day in 2010, compared with 84.46 million barrels a day last year, according to Opec. It raised forecast for this year by 100,000 barrels a day.

‘Ideal’ price
Crude oil advanced to a five-month high earlier this month, trading as high as $84.43 a barrel on October 7. Saudi Arabian Oil Minister Ali al-Naimi, arriving for this week’s Opec meeting, said yesterday the $70 to $80 price level is “ideal.”

The group effectively reversed the supply cuts announced in 2008 as rising prices and rebounding demand encouraged members to flout their individual limits. Compliance with production quotas agreed to in 2008 increased to 57 per cent from a revised 53 per cent in August.

Opec raised production by 5 per cent from a five-year low in March 2009, and now exceeds its own target by 1.9 million barrels a day, about the same amount as Angola produces. Output from the 12 members was 29.1 million barrels a day in September, according to Bloomberg estimates.

Opec’s 12 members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. The organization’s next meeting is scheduled for October 14 in Vienna.