London: A fragile global economy is likely to suppress oil demand growth to 1.3 million barrels per day (bpd) in 2012, lower than this year, the Organization of the Petroleum Exporting Countries said in its first forecast for next year.
Oil prices could draw some support from a lingering supply shortfall of more than a million bpd between the anticipated need for Opec crude and the amount pumped by the 12-member group, although increased output from top producer Saudi Arabia has narrowed the gap.
In its monthly report on Tuesday, Opec predicted world oil consumption would rise by 1.36 million bpd this year, slightly lower than the 1.38 million bpd expected in last month’s report.
It said the demand outlook was subject to much uncertainty and would depend on factors such as the speed of Japan’s recovery from this year’s nuclear disaster and tsunami, as well as on the impact of oil prices on developed economies.
“Should higher international oil prices persist, or should further setbacks in the OECD economies occur, then it might impose a stronger reverse elasticity on oil demand, putting more weight on the downside risk,” Opec said.
“This risk might be translated into a reduction of current growth by 200,000 bpd.”
The demand for Opec’s crude was estimated to rise to 30.3 million bpd next year, from 30 million bpd in 2011.
At a meeting in June, Opec failed to reach agreement on a Saudi-led proposal to increase output even though the group’s own economists forecast a supply gap in the second half of the year. Tuesday’s report implied a shortfall of 1.25 mn bpd.
Saudi Arabia has since unilaterally added some 461,000 bpd to its production in June, compared with May, taking its output to 9.42 million bpd, according to secondary sources cited by the report.
Opec output as a whole rose by 520,000 bpd in June compared with May to 29.60 million bpd, the secondary sources found.
In response to the failed Opec meeting, the International Energy Agency, led by top oil consumer the United States, announced the release of 60 million bpd from emergency stockpiles late last month.
Some Opec officials, notably from Iran, condemned the intervention and Opec’s monthly report also implied criticism.
“Speculative activity has continued to push prices beyond levels justified by fundamentals”, the report said.
“The market reaction to the recent decision to release Strategic Petroleum Reserves provides a good example,” it continued, noting prices had initially fallen sharply, but then recovered.
Brent crude futures were trading above $115 a barrel on Tuesday, higher than before the announcement of the IEA’s emergency reserves release.