London: The Organization of Petroleum Exporting Countries (Opec) cut its global oil demand growth forecast for this year and 2012 on weakening economic outlook in industrialized nations, which may affect China and India.
Opec, responsible for about 40% of world crude supply, reduced its demand estimate for a third month on threats to the world economy. It predicts oil demand will grow 880,000 barrels a day this year, revised down from 1.06 million barrels a day in a report last month. Consumption in 2012 will rise 1.19 million barrels a day to 89 million, compared with a previous daily estimate of 1.27 million.
The economic downturn is taking its toll on world oil demand, especially in member countries of the Organization for Economic Co-operation and Development, Opec’s Vienna-based secretariat said on Tuesday in a report.
Chinese oil demand is bound to uncertainty because of new government policies aimed at reducing transport fuel use. India’s increase in retail prices is expected to play a major role in dampening oil consumption.
The producer group expects demand for its crude to reach 29.9 million barrels a day in 2011 and stay at that rate through next year. Opec production fell last month to that level, down by about 77,000 barrels a day from August. Excluding Iraq, the group pumped 27.2 million barrels a day.
Oil prices have been more volatile since May, with a pattern of steady rises followed by sharp drops amid rising concerns about the economic uncertainties, Opec said. Brent crude was $1, or 0.9%, lower at $107.95 as of 10.47am on London’s ICE Futures Europe Exchange. The contract has slipped 5.5% since September.
Crude supply from outside of Opec is forecast to increase by 360,000 barrels a day this year to 52.63 million this year. That’s revised down on lower-than-expected output from Canada, the UK, Brazil and Azerbaijan. Next year, non-Opec supply will increase 830,000 barrels a day to 53.46 million as Brazil, Canada, Colombia and the US lift production.
Opec’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. The organization is next due to meet on 14 December in Vienna.
The International Energy Agency, an adviser to oil-consuming nations, will release its monthly report on supply and demand on Wednesday.