US, Opec cut global oil demand forecast
London, October 11, 2012
Global oil demand is looking weaker than previously forecast as the slowing economy continues to weigh on consumption, according to monthly reports released by the US government and Opec.
The Organization of the Petroleum Exporting Countries trimmed its forecast for growth in world oil demand in 2013 by 30,000 barrels per day (bpd) to 780,000 bpd and said the risk remains skewed to the downside.
The producer group maintained oil supplies are adequate and pointed out this year's demand forecast has often been cut, while saying the supply from producers outside the 12-member group has performed well.
The US Energy Information Administration also painted a looser picture of oil markets through 2013, cutting its 2012 estimate for demand growth by 45,000 barrels per day (bpd) to 790,000 bpd and its 2013 estimate by 80,000 bpd to 920,000. It also boosted its supply estimates from non-Opec producers.
The EIA noted higher oil consumption in the US, which was expected to rise by 100,000 bpd next year, would be easily offset by declines in Europe and other OECD nations.
Oil markets have balanced concern about fuel demand against the threat of supply disruptions throughout the year, with prices peaking at $128 a barrel in early March, the highest level since 2008. Brent crude prices have climbed to more than $114 a barrel in recent days, again stirring worries rising fuel costs could hit struggling global economies.
Opec has maintained that supply is adequate and said in its report on Wednesday it was likely to stay so. It pointed out this year's demand forecast has often been cut, while saying that the supply from producers outside the 12-member group has performed well.
"This trend is not expected to change in the coming year, with the market continuing to be characterized by high volumes of crude supply and increasing production capacity," said the report from Opec's Vienna headquarters.
Top Opec producer Saudi Arabia made similar remarks on Tuesday, saying stability had been restored to the oil market and it was satisfied oil prices have fallen to a level that does not hamper global growth.
The EIA and Opec reports are two of three major oil outlooks due out this week, with the International Energy Agency to release its October oil markets outlook on Friday.
The EIA revised upward non-Opec oil production growth by 60,000 barrels per day (bpd) for 2012 to a 570,000-bpd rise against 2011. In September, it had forecast a 510,000-bpd annual gain.
Non-Opec output growth for 2013 was held flat at 1.24 million bpd by the EIA. Total production is now expected to be 52.53 million bpd in 2012, and 53.77 million bpd in 2013, compared with previous expectations of 52.49 million bpd for this year and 53.73 million bpd for next year.
Opec said extra oil from Saudi Arabia and other Gulf Arab members of the producer group this year has offset lower supply from fellow Opec country Iran, whose exports have been curbed by Western sanctions.
But Opec's report, citing secondary sources, said production fell by 265,000 bpd in September to 31.08 million bpd led by declines in Angola and Nigeria.
Iranian supply, which fell sharply earlier this year due to a European Union ban on its crude and tighter US sanctions over Tehran's nuclear programme, was steady in September at 2.72 million bpd.
A Reuters survey on September 28 said Opec output in September fell to 31.09 million bpd.
Despite the drop, Opec is still pumping more oil than the forecasted global demand for its crude -- and more than the production ceiling of 30 million bpd, which the group is supposed to stick to and which it will review at a meeting in December.
Opec expects global demand for its crude to average 29.80 million bpd next year, up 250,000 bpd from last month because of lower supply expectations from some non-Opec producers including India and some African countries.
Much of the growth in non-Opec supply is coming from the US, in the midst of a shale energy boom. Harry Tchilinguirian, analyst at BNP Paribas, thought the cut in non-Opec supply was most significant change in Opec's forecasts. - Reuters