Opec holds oil demand forecast steady, cautious on recovery

Opec holds oil demand forecast steady, cautious on recovery

Vienna: The Opec oil producers’ cartel held steady on Wednesday its forecast for modest growth in world oil demand this year, noting uncertainty about the pace of global economic recovery.

“The world economic pulse is the variable that will determine the fate of global oil demand this year," the Organization of Petroleum Exporting Countries said in its April report.

“Economic activities in the US are playing the wild card for world oil demand growth.

“Given the slow world economic recovery, world oil demand growth is forecast in 2010 at 0.9 million barrels per day (bpd) or 1.1% to average 85.2 million bpd," the report said.

That was unchanged from the previous report.

While some “minor" improvements were being seen in US oil demand as a result of increased economic activities, the low statistical base and cold weather, “it is still too early to draw a complete conclusion about the fate of the country’s oil demand," the cartel said.

Oil consumption is traditionally low in the second quarter, but the third quarter includes the summer driving season which has a large impact on gasoline demand.

“Should these two quarters not meet expectations in both industrial and transport fuels, then total world oil demand will slide from the current growth level," Opec wrote.

All of the anticipated growth in oil demand this year would come from developing countries, particularly in Asia, the report said.

For many years, industrialised countries in the OECD (Organisation for Economic Co-operation and Development) region had been the main contributor to world oil demand growth until 2005.

“The picture has changed since 2006 as the emerging economies became the sole contributor to world oil demand."

During the peak of the world financial crisis in 2009, OECD oil demand declined by almost 2.0 million bpd, Opec said.

“OECD oil demand is forecast to bounce back; however, it will remain in the red by more than 0.1 million bpd in 2010," it predicted.

On Tuesday, the Paris-based International Energy Agency (IEA) raised its forecast for oil demand, but warned about potential risks to the economic recovery posed by high energy costs.

Oil prices above $80 a barrel could hamper economic recovery, the IEA said.