Doha: Organization of the Petroleum Exporting Countries (OPEC) will cut its 2009 oil demand forecast this week, the group’s secretary general said on Monday, a move that may lend support to calls from some members for further supply curbs at a meeting on Sunday.
OPEC expects the slowing global economy to burn a million barrels per day (bpd) less oil than the producer group forecast just a month ago, Abdullah al-Badri told reporters in Qatar on the sidelines of an energy conference.
Badri, who has previously said the Organization of the Petroleum Exporting Countries may lower supply further when it meets in Vienna on Sunday, reiterated that an additional curb was among its choices.
“All options are on the table,” he said when asked if OPEC needed to cut again to balance the market.
OPEC is scheduled to release its latest Monthly Oil Market Report, written by economists based at its Vienna headquarters, on Friday. Its demand estimate is key to the OPEC oil ministers’ decision on how much oil to pump.
Oil use is falling in 2009 for a second consecutive year, the first slide in a generation, due to the global economic crisis. OPEC’s most recent report forecast global demand will fall by 580,000 bpd in 2009 to average 85.13 million bpd.
The group, which produces more than a third of the world’s oil, has pledged to cut 4.2 million bpd, around 5% of global supply, since September to tackle oil’s $100-a-barrel collapse from last year’s record high.
The curbs had stabilized the oil market, Badri said. Compliance among OPEC members with agreed reductions stood at around 85%, he said.
Still, demand for OPEC’s oil was down 1.9 million bpd from last year and the fall in consumption would continue to hurt the price, he said.
“We expect to continue to see downward pressure on prices,” Badri told the conference earlier in a speech.
The oil price was too low for OPEC but could have been worse given the deteriorating economy, Badri told reporters.
“The price is not really acceptable to us,” Badri said. “But given the economic crisis it is OK.”
US crude has fallen over $100 a barrel to around $46 a barrel from a peak last July near $150. The price was too low to encourage investment to meet future energy growth and could lead to future supply and demand imbalances, Badri said.
“A $40, or even a $50 price, is not the price where you can invest - no way,” Badri said.
OPEC members, who hold more than three quarters of the world’s proven oil reserves, have postponed some projects to expand supplies due to low prices and falling demand.
Top oil exporter and OPEC’s most influential member Saudi Arabia has yet to state its position ahead of Sunday’s meeting. The kingdom said in January it would pump below its official OPEC target and do whatever was necessary to bring the market back into balance.
Saudi King Abdullah named $75 as a fair price for oil last year, a price well above current levels.
Other OPEC members have been divided in the run up to the meeting on whether another cut is necessary.
Venezuela and Libya have said there is too much crude in the market and a further supply curb may be needed.
But Iran, Angola and Ecuador see no need to cut again.