Cairo: The Organization of the Petroleum Exporting Countries (Opec) forecast slightly higher oil demand in 2010, but cautioned that the pace of the global recovery may affect appetite for its chief export.
The 12-nation Opec said in its December Monthly Oil Market Report on Tuesday, a week before it’s due to meet, it expects world oil demand to increase by 800,000 barrels a day to 85.13 million barrels a day, largely from developing countries. That’s a 70,000 barrel per day increase from its November forecast.
The group, which supplies around 35% of the world’s crude, said the market still faced some risks linked in part to the pace of the world’s ability to rebound from its worst recession in at least six decades.
Opec said oil inventories remain exceedingly high in developed nations and ample stocks of refined petroleum products could continue to affect demand and oil prices.
“A more detailed look at the supply/demand balance indicates that fundamentals will continue to be weak in the first half of the year before improving in the second half, as reflected in the demand for Opec crude,” Opec said.
“Despite the low base in world oil demand in 2009, which suggests a strong increase in 2010 oil demand growth, the possibility of a weak and slow economic recovery could adversely affect oil demand growth,” it said.
The report is generally optimistic about the rebound in demand in 2010, but also offers a sobering reminder of the challenges the group faces in trying to support prices.
Oil prices hovered below $70 (Rs3,262) a barrel on Tuesday in Asia after dropping the last nine days on investor doubts about a recovery in US crude demand and amid a strengthening dollar.
Saudi Arabia’s oil minister earlier described oil prices as “perfect”. Opec has said oil at $75-80 a barrel was a fair price for producers and consumers. But crude has fallen by about $7 a barrel in the past few weeks. Opec ministers meet in Luanda, Angola, on 22 December, but several of the bloc’s biggest producers have indicated that a change in member quotas was not likely.
Opec has left its members’ production quotas unchanged since last December, when it announced the last of a series of cuts aimed at bringing their output down by 4.2 million barrels a day. The cuts helped engineer a rebound in crude prices, which had collapsed to the low $30s from a mid-2008 high of almost $150 per barrel.
Opec said production from 11 members—not including Iraq which is currently exempt from the quotas—averaged 26.61 million barrels per day in November. That increase of 44,000 barrels a day from the previous month showed more erosion in compliance with output levels from the members.