Opec trims oil demand amid US budget impasse
London, October 10, 2013
The Organization of the Petroleum Exporting Countries (Opec) has trimmed its forecast for US growth in 2013, warning that the ongoing budget impasse in Washington could damage the recovery.
The group cut its forecast from GDP growth of 1.7 per cent to a 1.6 per cent expansion for this year.
While there was a healthy momentum to the US recovery in recent months, the government shutdown, now in its tenth day, "could hamper the US recovery and, if left unresolved, could potentially impact the global economy."
Even an eventual resolution which postponed the discussion for a few months would merely prolong the uncertainty and could create another drag on the still fragile recovery, Opec said.
The US growth forecast for 2014 remained at 2.5 per cent.
While US political tensions have increased, Opec said that the easing of global political problems had started to bring the average price of oil down. The price still rose for a fourth consecutive month in September.
World oil demand is still expected to average 89.7 million barrels per day for 2013, an increase of 800,000 from last year.
"An improvement in supply prospects from the Mena region and Sudan, along with assurances by major suppliers and international oil agencies that the market was well-supplied, also dampened the upward pressure on crude oil prices," the report stated.
Oil supply is expected to continue to grow, with higher-than-expected supply from the US, Brazil, Kazakhstan, South Sudan and Sudan, while Syria, the UK, Norway and Australia represent the steepest declines in oil supply as 2013 comes to a close.
Opec's global growth forecast for 2013 and 2014 remain the same, 2.9 and 3.5 per cent respectively, but there was a downgrade for India on top of its downgrade for the US.
India's 2013 and 2014 forecasts have been downgraded to 5 and 5.8 per cent respectively.
Looking ahead to the winter season, Opec said the oil market will vary, with the USand Europe expected to remain stable, while Asia's contribution to growth in demand is expected to decelerate.
That is mainly due to general demand reduction during the monsoon and the lessening of diesel subsidies in places like Indonesia and Malaysia.
"Despite the more positive outlook for the US and Europe, global product markets are expected to come under pressure over the winter season.
The combination of sluggish demand and increasing product supplies are likely to dampen margins, leading to lower refinery runs over this period," he added.-Reuters