China's CNPC forecasts global oil to average at $40 a barrel this year, a conservative market view that has led the firm to expect its crude output to drop for the first time in years, a company executive said on Saturday.

The world's number two oil consumer, accounting for more than a third of incremental world oil demand in the past few years, has been hit by the global economic crisis, with its oil use falling since November and fuel stocks brimming as industrial activities slow.

CNPC, parent of PetroChina and producing nearly 60 percent of China's total domestic crude, would likely see its oil output drop below 2008 levels this year, reversing a long upward trend, Yu Baocai, CNPC's vice-president, said.

"Now the demand is lower than last year, it's natural to have lower output," Yu told Reuters. "I expect full year oil demand to be lower than last year though second-half demand may be better than first-half."

CNPC's price forecast is below that of a recent Reuters poll that saw benchmark US crude averaging $52 a barrel in 2009.

"Setting a relatively lower oil price target would reduce risks in our business planning," Yu said.

CNPC produces nearly 60 percent of China's total domestic crude of about 3.8 million barrels per day.

Earlier in the week, a PetroChina executive said the top Asian oil and gas producer had cut 2009 output targets at many fields by 10 to 20 percent below levels set at the beginning of the year.-Reuters